From Chaos to Control: Credit Risk Management Innovations

Frank J. Fabozzi

Chapter 8 in Credit Market Innovations:How Institutions, Technology, and Regulation Are Reshaping Global Lending, 2026, pp 235-271 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The following sections are included:Introduction: The Art of Avoiding Credit DisasterThe Role of Risk Management in Credit MarketsPrinciples of Credit Risk ManagementBCBS principlesA closer look at robust governance and oversightHistorical Evolution of Risk Management in Credit MarketsHedging Default Risk with CDSsQuantitative Risk Models: Advanced Algorithms for Risk AssessmentStress Testing: Modeling Economic Crises and Portfolio VulnerabilitiesSupervisory stress-test scenariosAlternative stress-testing scenarios: Beyond regulatory frameworksThe role of stress testing in managing systemic riskChallenges and limitations of stress testingIntegration of AI and Big Data in Risk ManagementSystemic Risk and Macroprudential RegulationThe role of stress testing in macroprudential regulationAddressing systemic risk through capital buffers and liquidity requirementsThe importance of macroprudential oversight in global financial stabilityThe role of technology and data in macroprudential regulationSummary

Keywords: Credit; Innovation; Lending; Technology; Regulation; Risk; Institutions; Markets; Credit Risk; Securitization; Credit Scoring; Fintech; Private Credit; Structured Finance; Credit Instruments; Blockchain; Artificial Intelligence; Machine Learning; Stress Testing; Risk Models; Debt Markets; Digital Lending; Central Banks; Financial Regulation; Credit Cycles; Institutional Investors; Capital Markets; Credit Products; Legal Innovation; Market Structure; ESG; Macroprudential; Asset-backed Securities; CLOs; Credit Analytics; Big Data; Data Privacy; Financial Technology; Underwriting; Alternative Data; Credit Access; Risk Management; Credit Derivatives; Distributed Ledger; Tokenization; DeFi; Credit Enhancement; Yield Curves; Credit Spreads; Default Risk; Credit Innovation; Loan Syndication; Legal Frameworks; Compliance; Basel III; Systemic Risk; Lending Platforms; SME Lending; Consumer Credit; Mortgage-backed Securities; Securitized Products; Credit Performance; Credit Transformation; Credit Monitoring; Algorithmic Lending; Digital Identity; Financial Inclusion; Credit Exposure; Peer-to-peer Lending; Nonbank Lenders; Financial Infrastructure; Payment Systems; Real-time Data; Financial Resilience; Geopolitical Risk; Regulatory Arbitrage; Collateral; Capital Requirements; Loan Origination; Portfolio Risk; Operational Risk; Credit Risk Transfer; Data Analytics; Transparency; Investor Protection; Risk-adjusted Returns; Rating Agencies; Credit Default Swaps; Legal Risk; Structured Credit; Lending Innovation; Compliance Tech; Stress Scenarios; AI Credit Modeling; Privacy Laws; Quant Credit Models; Credit Policy; Regulatory Innovation; Market Transparency; Cyber Risk; Default Models (search for similar items in EconPapers)
JEL-codes: D82 G21 G28 G32 O33 (search for similar items in EconPapers)
Date: 2026
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