Publication:
Contingent Liabilities Risk Management: A Credit Risk Analysis Framework for Sovereign Guarantees and On-Lending—Country Experiences from Colombia, Indonesia, Sweden, and Turkey

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dc.contributor.authorBachmair, Fritz Florian
dc.date.accessioned2016-02-02T22:36:54Z
dc.date.available2016-02-02T22:36:54Z
dc.date.issued2016-01
dc.description.abstractSovereign credit guarantees and government on-lending can catalyze private sector investment and fulfill specific policy objectives. However, contingent liabilities stemming from guarantees and contingent assets stemming from on-lending expose governments to risk. Prudent risk management, including risk analysis and measurement, can help identify and mitigate these risks. This paper proposes a four-step structure for analyzing and measuring credit risk: (i) defining key characteristics to determine the choice of a risk analysis approach; (ii) analyzing risk drivers; (iii) quantifying risks; and (iv) applying risk analyses and quantification to the design of risk management tools. This structure is based on an assessment of approaches discussed in academia and applied in practice. The paper demonstrates how the four steps of credit risk management are applied in Colombia, Sweden, and Turkey. It also discusses how the proposed framework is applied in Indonesia as it develops a credit risk management framework for sovereign guarantees. Country experiences show that although sovereign risk managers can draw on insights from credit risk management in the private sector, academic literature, and practices in other countries, approaches to risk management need to be highly context-specific. Key differentiating factors include characteristics of the guarantee and on-lending portfolio, the sovereign’s specific risk exposure, the availability of market information and data, and resources and capacity in the public sector. Developing a sound risk analysis and measurement framework requires significant investments in resources, capacity building, and time. Governments should view this process as iterative and long-term.en
dc.identifierhttp://documents.worldbank.org/curated/en/2016/01/25818107/contingent-liabilities-risk-management-credit-risk-analysis-framework-sovereign-guarantees-on-lendingcountry-experiences-colombia-indonesia-sweden-turkey
dc.identifier.doi10.1596/1813-9450-7538
dc.identifier.urihttps://hdl.handle.net/10986/23713
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 7538
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectFINANCIAL CAPABILITY
dc.subjectFINANCIAL CONSUMER PROTECTION
dc.subjectFINANCIAL INCLUSION
dc.subjectFINANCIAL SERVICE PROVIDERS
dc.subjectFINANCIAL STABILITY
dc.subjectHOUSEHOLD WELFARE
dc.subjectSURVEYS
dc.titleContingent Liabilities Risk Managementen
dc.title.subtitleA Credit Risk Analysis Framework for Sovereign Guarantees and On-Lending—Country Experiences from Colombia, Indonesia, Sweden, and Turkeyen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleContingent Liabilities Risk Management: A Credit Risk Analysis Framework for Sovereign Guarantees and On-Lending: Country Experiences from Colombia, Indonesia, Sweden, and Turkey
okr.date.disclosure2016-01-22
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://documents.worldbank.org/curated/en/2016/01/25818107/contingent-liabilities-risk-management-credit-risk-analysis-framework-sovereign-guarantees-on-lendingcountry-experiences-colombia-indonesia-sweden-turkey
okr.guid138921468195001816
okr.identifier.doi10.1596/1813-9450-7538
okr.identifier.externaldocumentum090224b0840f0f9c_1_0
okr.identifier.internaldocumentum25818107
okr.identifier.reportWPS7538
okr.importedtrue
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2016/01/22/090224b0840f0f9c/1_0/Rendered/PDF/Contingent0lia000Sweden00and0Turkey.pdfen
okr.region.countryColombia
okr.region.countryIndonesia
okr.region.countrySweden
okr.region.countryTurkiye
okr.topicFinance and Financial Sector Development::Banks & Banking Reform
okr.topicFinance and Financial Sector Development::Bankruptcy and Resolution of Financial Distress
okr.topicFinance and Financial Sector Development::Insurance & Risk Mitigation
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicFinance and Financial Sector Development::Access to Finance
okr.unitGovernment Debt and Risk Management Unit, World Bank Treasury
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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