2016-FRR Exam Dumps | A credit analyst wants to determine if her bank is taking too much credit risk. Which one of the following

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GARP.2016-FRR.v2024-09-09.q145
Question 72

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Question 72/145

A credit analyst wants to determine if her bank is taking too much credit risk. Which one of the following four strategies will typically provide the most convenient approach to quantify the credit risk exposure for the bank?

A. Assessing aggregate exposure at default at various time points and at various confidence levels

B. Simplifying individual credit exposures so that they can be combined into a simplified expression of portfolio risk for the bank

C. Using stress testing techniques to forecast underlying macroeconomic factors and bank's idiosyncratic risks

D. Analyzing distribution of bank's credit losses and mapping credit risks at various statistical levels

Correct Answer: D

The most convenient approach for a credit analyst to quantify the credit risk exposure for the bank would be to analyze the distribution of the bank's credit losses and map credit risks at various statistical levels. This method provides a comprehensive view of potential losses and the probabilities associated with different loss levels, which is crucial for effective risk management and regulatory compliance.

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