Believe it or not, this reference book is a page-turner

RMA Journal, The, Dec, 2003 by Dan Stein

Credit Risk Management by Brian J. Ranson

ISBN 1-55827-366-2; [c] 2003 Seshunoff Information Services, Inc., $325.

Starting with the postulation that credit risk is banks' greatest risk, Brian Ranson's comprehensive textbook thoroughly explains all credit concepts, both new age and traditional. From examining all aspects of default risk, to explaining the importance of credit risk, to designing systems for developing and measuring each approach, Credit Risk Management delivers a complete series of courses on its general topic.

Ranson does not stop with traditional credit risk considerations. Although credit risk is covered expertly and thoroughly, Credit Risk Management includes a spectrum of risk management chapters and topics. In fact, risk management and capital requirements of the credit function may be a more fitting title of this work, which serves as a tribute to the depth of knowledge Ranson brings to the subject.

The new Basel proposals are examined in detail, as well as the development, implementation, and measurement of credit risk, using such state-of-the-art risk management tools as probability of loss and expected default. Ranson also analyzes current purveyors of systems and programs to calculate and measure these risks. Tools and concepts are evaluated in light of recent and memorable failures in the financial marketplace, such as Enron and the inadequacies of GAAP reporting in the accounting profession.

Credit Risk Management serves as a reference book in its coverage of credit risk--definition, measurement, accounting treatment, and other considerations for the credit manager, investment advisor, or other financial services professional. Ranson discusses all types of credit risk--from retail or consumer loans to small business, structured notes and leveraged loans, and derivative credit products--and also explores workout strategies. Information is well indexed to allow the credit novice as well as the seasoned practitioner to extract it at will.

For those wishing to curl up with a thorough discussion of credit risk, or to the greater number who require a reference work clearly indexed and subtitled, this publication delivers a complete list of topics and related information required to master the various phases of credit risk management. And, believe it or not, Credit Risk Management is a page-turner. A lifetime of experience, presented in a professional and sometimes humorous manner, propels the reader toward each new chapter.

As Ranson says, "... credit risk must be well measured and well managed" and the institution that "provides the best data and demonstrates its grasp of risk has an opportunity to distinguish itself." Within the pages of Credit Risk Management, Ranson demonstrates that the expert institution is in the vanguard of measuring and communicating its knowledge in assuming credit risk.

If one's goal is to have meaningful input into the credit risk process in an institution, Credit Risk Management is a must read. It will then become one of your favorite reference works.

Dan Stein is VP, Commercial Credit Risk Management, KeyBank, N.A., Cleveland, Ohio. He serves as a member of the Editorial Advisory Board of The RMA Journal. Contact Stein by e-mail at daniel_stein@keybank.com.

The November 2003 issue of The RMA Journal included an extract from a chapter of Credit Risk Management. "The Merit of the Journey: A Counterpoint to RAROC Critics" appeared on pages 53-57.