The credit risk management during the process of extending credit

The subject of this bachelor thesis is a credit risk, which I try to define, as well as some other risks, that are threatening the banking institutions. I also address its management during the process of extending credit by a bank. This procedure has several important phases, which include evaluation of creditworthiness of a client. It depends on a character of the client and the type of the provided credit. The bank evaluates specific characteristics and information, which can be acquired from example from one of the four Credit Bureaus operating in the Czech republic. Important part of the management is formed by creating adjusting entries, that are used for covering of incidental losses in the case of client's failure. This process is partially influenced by the Czech National Bank, in the role of regulator and supervising authority. The last big changes on the part of CNB were made by accepting the Basel II concept, which revises for example measuring of the credit risk. Even if all the prescribed requisities are followed, the approach of every bank is different. As an illustration I show the processes of Ceska sporitelna