The Emergence of Credit Ratings Tools

The 2008 financial crisis has shown that the reference context for supervisors, banks, public entities, non-financial firms, and even families had changed more than expected. From the perspective of banks’ risk management, it is necessary to acknowledge the development of: new contracts, new tools, new players, new regulations, and new forces pushing towards profitability and growth. Three key aspects have to be considered: none of the aforementioned innovations can be considered relevant without the existence of the others; each of the aforementioned innovations is useful to achieve higher levels of efficiency in managing banks; and all of these innovations are essentially procyclical. Systems to measure expected losses and unexpected losses are tools which are nowadays regarded as a basic requirement. The competitive value of these tools pushes for an in-house building of models, also in accordance with the Basel Committee on Banking Supervision hopes. Controlled Vocabulary Terms risk management