Learning Objectives
By the end of this module, you will be able to:
Understand the Role of LGD in Lending
Explain the purpose of Loss Given Default (LGD) in credit risk assessment.
Recognise LGD’s impact on capital allocation, pricing decisions, and risk appetit.
Understand how LGD supports regulatory compliance and portfolio profitability
Evaluate Key LGD Metrics and Influencing Factors
Accurately calculate LGD using collateral values, recovery rates, and realisation costs.
Analyse how market volatility, industry conditions, and security type influence LGD outcomes
Tailor Loan Structures Based on LGD Insights
Recommend appropriate loan terms, covenants, and pricing that align with LGD analysis.
Ensure loan products are structured to minimise potential losses and safeguard lender interests
Incorporate LGD into Risk Mitigation Strategies
Use LGD to identify gaps in recovery and recommend additional security or repayment arrangements.
Model default scenarios and refine facility structures to strengthen risk mitigation
Apply LGD Analysis to Real-World Scenarios
Practise LGD calculations across secured lending and recovery planning case studies.
