The term credit risk can be applied to individuals or companies. Within financial institutions there are usually credit risk consultants whose job it is to assess the credit risk of clients before extending credit to them. Assessing the credit risk of a client means to assess the potential (whether high or low) of the client to default on his/her loan agreement. It is always the lender that carries the risk when it comes to a mutual credit agreement. Credit risk consultants are required to get important information from borrowers before any type of credit agreement is approved. Risk consultants have to know exactly what credit profile numbers mean and how they apply to each client. They should also be able to advise clients how to improve their credit score if they are on a downward slope. It is important that each client is looked at with fresh eyes so as to minimise mistakes which could result in a faulty credit report.
Credit risk consultants must use their exceptional attention to detail abilities to analyse credit reports and other data pertaining to their daily jobs. Credit analysts are mainly employed by large companies to help reduce their credit risk as well. Other responsibilities:
- Credit risk consultants have to be able to assess non-performing credit applications and/or loans and formulate a plan of action
- Monthly financial analysis of reports are a must
- Continuous monitoring of risk profiles is essential