Adapting Credit Risk Models for a Changing Economy

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Adapting Credit Risk Models for a Changing Economy | Credit Risk Unlocked

In this insightful interview, data analytics expert Varun Nakra explores the evolving landscape of credit risk management. He delves into the importance of customizing credit risk models to meet the demands of a fast-paced global economy and highlights the critical role of macroeconomic factors and advanced methodologies.

Mar 07, 2025

Varun Nakra, VP Credit Risk Modelling, Deutsche Bank

Tags: Credit Risk

Adapting Credit Risk Models for a Changing Economy | Credit Risk Unlocked

Credit risk modeling requires a tailored approach, as there is no one-size-fits-all methodology; the model's design must align with the specific quantitative challenges and objectives.
Models must undergo regular recalibration to remain relevant, influenced by changes in data inputs, regulatory requirements, and evolving market conditions.
Macroeconomic factors significantly impact credit risk models, necessitating their integration into stress testing to ensure financial institutions can withstand economic shocks.
Advanced technologies, such as AI and machine learning, present both opportunities for improved accuracy in credit risk predictions and challenges related to model interpretability and implementation.