This course covers Capital Lock-in Risk, which involves assessing the risk of capital being locked in for extended periods within Distressed & Structured Asset Credit (ARD) workflows, particularly for accounts requiring structured assessment, boundary definition, and independent review. It evaluates key dimensions such as correlation, systemic risks in distressed assets, and management of stressed and restructured exposures, with each requiring independent validation and documented rationale before any credit action is finalized.
It is distinct from related approaches such as portfolio diversification strategy, as it focuses on structured identification of exposure-level lock-in risks and breach response mechanisms, rather than broader strategic allocation frameworks. Within Portfolio Concentration & Systemic Risk, the senior credit leader sets portfolio limits, governs exception criteria, and drives strategic alignment across the Distressed & Structured Asset Credit (ARD) function, shaping escalation scope and credit committee priorities.