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// ← EVERY SEATRISK · COMPLIANCE · AUDIT

Top floor · The boardroom

Credit Risk Analyst

Sets and monitors the standard the lending line works to — policy, appetite, ratings and the models underneath them.

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// 01 — WHAT A CREDIT RISK ANALYST DOES

The unit of work is the portfolio rather than the file: which segments are growing, what the ratings say about them, whether losses are behaving as the models expected, and what policy should change as a result. The seat writes the rules a credit analyst then applies.

// 02 — WHO ARRIVES HERE

From credit analysis, from data and analytics, and from outside banking with an economics, statistics or actuarial background.

// 03 — WHAT THE INTERVIEW ASKS

These are the shapes the round takes, not a question bank — banks phrase them differently and the wording is never the point.

  1. 01What would you look at to decide whether our appetite for a sector is too generous?
  2. 02Losses are lower than the model predicted. Is that good news?
  3. 03How would you explain a rating change to the banker whose client it is?
  4. 04What is the difference between expected loss and the loss you should plan for?
  5. 05How do you set a policy that will still be right in a downturn?
  6. 06Where do policies get worked around, and what do you do about it?

What the panel is listening for. Whether you can reason about a portfolio without losing the individual borrower — the failure mode here is a rule that is defensible on a slide and unworkable on a desk.

Practise the round in the risk, compliance and audit quiz: one of its five questions is this seat's own, and every answer has the senior interviewer's read.

Take the quiz →

// 04 — WHY CREDIT PAYS IN THIS SEAT

Portfolio policy is credit judgment generalised; the people who write good policy are almost always the ones who have read enough individual files to know what the rule will catch.

Policy that works on a desk is written by people who know what the rule will do to a real file. Below: a day in the seat, what the first year tests, and three issues where a portfolio policy meets an individual borrower.

START HERE · How banks manage credit risk

// 05 — A DAY IN THE SEAT

  1. 09:00The monthly portfolio pack: growth by segment, rating migration, arrears.
  2. 10:30The policy exceptions — which rules the front line asked to bend, and how often.
  3. 13:00A sector review: whether the bank's appetite for one industry still matches the market.
  4. 14:30Model monitoring: whether the ratings still separate good borrowers from bad.
  5. 16:00A lending head who thinks the new policy will cost them their best clients.

The shape of a day, not a rota — banks and books differ. A relationship manager's day is on what a commercial banker does.

// 06 — WHAT THE FIRST YEAR TESTS

  • Whether you can read a portfolio report and find the one segment that is moving.
  • Whether your analysis survives a lender asking what it means for a real borrower.
  • Whether you can explain a rating change in the desk's language, not the model's.
  • Whether you read the exceptions, where policy is actually being tested.

// 07 — WHAT YOU SEE FROM HERE

The whole book at once: every segment, every rating grade, and the losses that arrive years after the decisions that caused them. It is the seat that sees the bank's appetite as a set of numbers — and has to remember that each number is made of individual files.

// 08 — THE FILES TO PRACTISE ON

// 09 — WHERE THE SEAT LEADS

Into policy and appetite roles, into model ownership and validation, or back towards the front line as a senior credit officer who knows what the rules were for. The strongest risk people keep a foot in individual files for exactly that reason.

// 10 — READ BEFORE THE ROUND

THE IN-TRAY · ONE MINUTE

Make the call on one file.

A short file on the ground this page covers. Every option opens with how far it sits from a senior banker’s read.

THE NUMBER · THE LOAN · PRICE

A US$10m loan. The bank estimates a 2% chance the borrower defaults within a year, and expects to lose 40% of what is owed if it does.

What is the expected annual loss?

1 FILES · PICK A CALL ON ANY OF THEM

5 MORE ON THE LOAN · PRICE →WHERE DO YOU READ FROM? THE PLACEMENT →

// THE FREE CASE

FREE · NO PURCHASERead one complete case first Case 01 of the interview case pack — Northmark Engineering, the file, the diagnostic and the ninety-second walkthrough — in full, for an email address.10-PAGE PDF · FREE

// ALSO IN RISK · COMPLIANCE · AUDIT

The whole board, and how the four blocks fit together, is on what jobs banks hire for.