Commercial Bank Credit Risk Management. Engineering Thinking

Although the history of credit risk can be traced back to 1800 B.C., the management of credit risk had been stayed at the level of 'craft workshop' until 1980s. During the past 20 years, with more and more credit risk measurement models were applied, the management of credit risk has begun its transition to Engineering Credit Risk Management. The promulgate of 'The New Basle Capital Accord - Internal Ratings-Based approach' is the milestone of this transition.After reviewed the gradual progress of theory, this paper investigated the severe situation of credit risk that Chinese commercial banks faced. And further studied on the forming mechanism of the situation: the lack of credit culture is the environmental factor why credit risk comes into being; the lagged credit management mode is the institutional reason; The loopholes existed in credit risk supervision is also the important reason that the credit risk of commercial banks was caused.This text then put forward the engineering thoughts of credit risk management, and analyzed that Engineering Credit Risk Management will promote the credit risk management level of Chinese commercial banks. To follow, This text introduced the core technology of Engineering Credit Risk Management: Credit risk measurement models, and further used examples to illustrate how to apply these rnodels to measure and analyses credit risk.And then this text made the countermeasures of building credit risk management system: the first, good credit culture should be formed to build the cultural foundation of risk management of credit; Secondly, the structure of risk management should be improved to block up the loopholes of current risk supervision mode; Besides, credit collection system should be built as the guarantee because credit measure models needing accurate reliable datum; Most important, to achieve the revolution of credit risk management, Credit Risk Models should be set up; Finally , Chinese commercial banks Need took measures to manage credit risks, including the adoption of asset securitization and credit derivative securities.