Topics covered by credit risk training include portfolio optimization, securitization, derivative products, financial analysis and regulatory requirements. The training might be done in-house by professional firms or in the form of courses by professional training organizations. It might be aimed at beginners in the subject or at seasoned professionals. Credit risk training might take place in conferences covering a range of topical issues, or it might be performed in specialized seminars. A course might consider one aspect of credit risk analysis or look at credit risk in a particular country or region of the world.
Credit risk training is relevant to individual investors, professional advisers and corporate investment businesses. Although a lot of the training is aimed at credit risk managers, private investors might see great benefit from training on different types of credit derivative. This might cover their use of complex products such as synthetic collateralized debt obligations that make available different tranches, with different levels of risk attaching to the tranches. Investors might learn to understand the reasons why the risk levels of different tranches of debt might differ and gain greater knowledge of the methods used to assess credit risk levels.
Portfolio optimization also is of great interest to individual investors, and credit risk training might focus on portfolio credit risk models. Balancing risk and return for investors in a diversified portfolio is a primary concern. The use of instruments such as credit derivatives in a portfolio is, therefore, a specialized topic that could be the subject of a credit risk training course or conference.
The analysis of types of debt is important in credit risk training. A course might cover the evaluation of distressed debt or look at products offering different tranches of debt involving different levels of risk. A credit risk training course also might analyze different aspects of debt and equity or focus on the characteristics of subordinated or senior debt. Credit scores and the work of credit rating agencies also are covered in training courses.
Credit risk analysis also might focus on the likelihood of corporate failure. By the analysis of financial statements and the use of financial ratios, the training might look at the signals that indicate that a company has a liquidity problem. Cash flow analysis might be used to examine whether the company will be in a position to pay its debts as they fall due. Training also might cover topics such as off-balance-sheet financing, which might result in a balance sheet that looks stronger than actually is. Historical trends of liquidity ratios in the previous few accounting periods might be used in combination with cash flow forecasts to look at the credit risk going forward.