CREDIT RISK MANAGEMENT REVIEW IN ACCORDANCE TO THE BASEL COMMITTEE AND THE RECOMMENDATIONS OF THE BANK OF RUSSIA

Abstract

Banks are exposed to several kinds of financial and non-financial risks. Hence, risk management is practiced on a regular basis by banks in order to manage and control the risks that they encounter during their operations and those that they may face in the future. Credit risk is an important area of study since any significant default on the part of borrowers can lead to a crisis for individual banks and for entire banking systems. The main aim of this article is to review regulatory issues and proceeds to the problem motivation and formulation. Subsequent to introduction of Basel II and III accords, the rules and recommendations of bank of Russia are reviewed. This study concludes to the importance of risk management and the importance of develop complex models for credit risk management, and the authorities' role in facing new challenges and facing greater risks.