Credit risk - The Importance of Credit Portfolio Management

Credit risk is the major risk that an institution, whether financial or non-financial, faces. In this paper, we begin by defining what is the credit risk, then turn on the parameters considered fundamental by the Basel Accords, namely PD - probability of default, LGD - loss given default, EAD - exposure the date of default and M - maturity. It is then expected loss of the connection between what is considered an expense to the concepts of impairment. Currently the International Accounting Standards, in particular, IFRS9 is noted that the calculation of the impairment should be based on the expected loss, that while it is pressing on credit institutions, regardless of the rules that exist, a requirement also for SMEs (small medium enterprises) in credit management. It highlights that the SNC (Accounting System in Portugal – “Sistema de Normalização Contabilístico”), with particular emphasis on NCRF27 (Standard number 27), does not address this aspect, since there can be impaired as long as there is objective evidence. It should, in conclusion, that in Portugal the national regulatory and tax regulations were compatible with international standards