PD Based Internal Ratings In Commercial Banking

The risk a customer might default is the primary driver for loss for a commercial bank. Risk measurement is one of the difficult challenges facing modern commercial banks, and ability of risk measurement is a indicator to level of risk management for commercial banks .To begin with 'default definition ',it is discussed to resolve the issues of creating proper standard to measure against and adopt what methodology to actually measure risk, also to properly valuate risk drivers and potential tradeoff between loss and reward etc in the article. Author also studies public available credit risk measurement technologies and related data, and describes efforts by commercial banks in the area of credit risk measurement. Author believes that commercial banks should step up to study and experience before CBRC issue the demands of BASELII, which help to keep advantage , win the chance.