Counterparty Credit Risk: Analysis and Management Fundamentals

In modern financial markets, understanding the risk of a counterparty defaulting before a transaction settles is critical for safeguarding institutional capital. This text-based course provides a clear, step-by-step pathway to understanding and managing counterparty credit risk (CCR) without needing prior complex quantitative finance experience. You will transition from basic risk concepts to confidently analyzing derivative exposures and applying regulatory standards. Through clear written explanations, practical examples, and step-by-step calculations, you will understand how financial institutions measure potential losses, adjust pricing for credit risk, and comply with international banking standards. What you'll learn: Understand foundational credit risk terminology, including mark-to-market exposure and default probability; Calculate potential future exposure (PFE) and expected positive exposure (EPE) using standard risk models; Apply Credit Valuation Adjustment (CVA) concepts to price counterparty risk into derivative contracts; Identify and mitigate wrong-way risk and gap risk in complex market scenarios; Interpret Basel regulatory capital requirements and modern risk management frameworks; Practice risk assessment scenarios through structured written exercises and conceptual case studies. The course begins with core definitions and the mechanics of bilateral exposure before moving into valuation adjustments and global regulatory standards. You will read comprehensive breakdowns of risk formulas and apply your knowledge through practical written review scenarios. This course is designed for aspiring risk analysts, finance professionals, and students seeking a clear introduction to credit risk management, with no advanced mathematical background required. Start reading today to build a strong foundation in modern counterparty credit risk analysis.