Abstract:

One of the major risks that banks are exposed is credit risk and the management of these risks is very important in the preservation of financial stability. The management of credit risk is possible in the first place by measuring it consistently and correctly. The information obtained from credit risk analysis and measurement is used in the design of risk reduction and risk management tools. The aim of this study is to evaluate credit risk measurement models and provide the benefit of the establishment of the appropriate model to measure the credit risk exposed to organizations, including the banking sector. The assessment of the credit risk is quite complicated due to the involvement of many uncertain factors in the calculation of losses. There are many different approaches to credit risk assessment. In various models developed to measure credit risk, the main objective is to manage credit risk through portfolio pricing. This study included the classic and modern methods of credit risk measurement used in the modeling of the credit risk of a credit company, as well as the models produced by international financial institutions for the purpose of assessing the credit risk of a portfolio.

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