Credit Risk Certification

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Credit Risk Certification

What Is Credit Risk Certification?

The Risk Management Association’s credit risk certification, or CRC, is a professional credential (RMA).Individuals who have worked in commercial credit, lending, or loan review for at least three years and pass the five-hour, 120-question credit risk certification test become active members of the Risk Management Association.

Key Takeaways

  • The Risk Management Association (RMA) awards credit risk accreditation along with membership in the organization.
  • Credit risk managers are people “tasked with making choices that effect the composition and performance of loans,” according to the RMA.
  • Individuals who have worked in commercial credit and lending or loan review for at least three years and pass the five-hour, 120-question credit risk certification test are certified.

How Credit Risk Certification Works

Successful candidates are granted the opportunity to use the credit risk certification designation after their names, which improves their career possibilities, professional reputation, and remuneration. Credit risk certified professionals must complete 45 hours of continuing education every three years to maintain their accreditation.

To get certification, a candidate must demonstrate expertise in the following areas:

  • Evaluating the industry, market, and rivals of a customer.
  • Evaluating management’s capacity to develop and implement commercial and financial strategy.
  • Accurate and continuing financial analyses of the customer and its credit sponsors
  • evaluating the client’s or sponsor’s cash flow’s strength and quality
  • Evaluating and examining collateral on a regular basis.
  • Identifying repayment sources, as well as managing and recording credit risk.
  • Detecting and working out issue loans.

What Is the Risk Management Association?

The Risk Management Group is a non-profit, member-driven professional association that serves the financial services sector to improve the implementation of effective risk management concepts. It advocates a risk management strategy that focuses on credit risk, market risk, operational risk, securities lending, and regulatory difficulties.

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The Risk Management Association was founded in 1914 as Robert Morris Associates, after Robert Morris, a signer of the Declaration of Independence and the primary financier of the Revolutionary War who helped build the United States banking system.

There are roughly 1,900 institutional members in the Risk Management Association. Banks and nonbank financial entities are included. Furthermore, the RMA has 18,500 associates who serve as relationship managers, credit officers, risk managers, and other financial services professionals at member banks.

What Is Credit Risk Management?

Risk management is the identification of hazards as well as the attempts to reduce, monitor, and control the likelihood or effect of unfavorable occurrences. The purpose of risk management is to ensure that uncertainty does not detract from company objectives. Risk management, according to the RMA, is “how a bank assesses, manages, and monitors its risks to achieve the targeted return on capital.”

Uncertainty in financial markets, threats from project failures, legal obligations, credit risk, accidents, natural causes and catastrophes, purposeful assaults from an enemy, or unexpected occurrences are all examples of risks.

Threat management strategies often involve avoiding the danger, lowering the threat’s negative impact or likelihood, or transferring all or part of the threat to another party.

When Is the Credit Risk Certification Exam Offered?

Each year, the CRC test is given in the spring, summer, and autumn.

What Courses Are Offered by the Risk Management Association?

Along with training for Credit Risk Certification, the RMA provides self-directed or instructor-led courses on subjects including Construction Loan Management and Critical Thinking, which may be accessed on their website.

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Are Practice Tests Available for the CRC Exam?

Several online test prep businesses provide access to practice examinations and mock tests for the Credit Risk Certification exam for a charge.

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