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Loss Given Default Assumption Design - Personal Loan Cred

Last Updated:05/2026 English (US) Instructor: Eduonix Learning Solutions

Lectures: 1
|
Videos: hours
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Level: All
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Language: English
|
Last Updated: 05/2026

Skills: Banking Finance

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About this Course

This course introduces the concept of Loss Given Default (LGD) Assumption Design within the Personal Loan Credit (Salaried/Self-Employed) framework. It focuses on designing robust LGD assumptions that accurately reflect expected loss severity in the event of borrower default, incorporating recovery behaviour, collateral (where applicable), and cost considerations.

Learners will explore key assessment dimensions such as estimating recovery rates based on historical behaviour, incorporating cost structures associated with collections and recovery processes, evaluating the role (if any) of collateral in unsecured lending contexts, and aligning LGD assumptions with income stability assessment insights, with an emphasis on independent validation and well-documented rationale. The course highlights how poorly designed LGD assumptions can distort pricing, misrepresent risk, and lead to suboptimal credit decisions. It also examines the importance of segmentation, scenario analysis, and periodic recalibration based on observed portfolio performance.

The course distinguishes LGD assumption design from broader portfolio diversification strategies, emphasizing its role in exposure-level loss estimation, risk identification, and structured response, whereas diversification focuses on distributing risk across segments. Each requires distinct evidence standards, ownership, and approval authority.

By the end of the course, participants will understand how to design, validate, and apply LGD assumptions in practice, particularly within Pricing, Tenor, and Risk–Reward Calibration. The course also emphasizes the role of the senior credit leader in setting portfolio limits, governing exception criteria, and driving strategic alignment across the Personal Loan Credit function, ensuring that loss assumptions support accurate pricing, disciplined risk management, and alignment with credit committee priorities.

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Eduonix Learning Solutions

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Eduonix creates and distributes high quality technology training content. Our team of industry professionals have been training manpower for more than a decade. We aim to teach technology the way it is used in industry and professional world. We have professional team of trainers for technologies ranging from Mobility, Web to Enterprise and Database and Server Administration.

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