J.P. Morgan - Global Credit Risk Management

Global Credit Risk Management

Risk's not the problem - provided you know how to manage it.

When we generate revenue through lending, trading and capital markets activity, there's always the risk that the return on our investment won't be what we expect. We don't like surprises. Neither do our clients. Our Risk Managers see to it that there aren't any unwelcome disclosures.

Risk in itself is no bad thing. After all, without risk, there'd be no profit. But it's a fine line - risk has a highly visible impact on the results of the firm, so the more successfully we manage risk, the more successful we are as a bank.

Such transparency places Risk Management right at the very heart of what we do as a business - as well as at the heart of global industry and commerce. Risk matters. Our Risk Managers enjoy high profile roles that have a visible influence on the performance of the bank across the entire product range.

Credit risk is the risk of loss if a client fails to honour their obligations. It's an element in virtually every service and product we provide to our clients. It's prevalence means that the training you receive as a graduate will provide you with an outstanding foundation for your long-term career development anywhere in J.P. Morgan.

Frequently, there may be more than one possible solution to solve a client's financial needs. This is why our Credit Risk Management teams work so closely with their colleagues in Investment Banking and Markets to ensure we find the right answer. This commitment to collaboration allows us to maximise our client relationships whilst managing the exposure we take on. Indeed, we organise ourselves in a way that's unique in our industry - by combining the credit analysis and decision making functions, the private side management and monitoring, and the public side analysis and trading, we're able to offer our clients (not to mention our graduates) a holistic view of risk management.

There are two main groups with Credit Risk Management in Asia: Credit Risk Management itself and Credit Portfolio Group.

Credit Risk Management

This group is made up of Credit Analysts and Client Credit Managers. Credit Analysts are part of specialised teams based in Mumbai with industry focus. They are responsible for performing detailed due diligence of clients' business operations, capital structure, management, and financial performance (historical and projected). They will also consider the impact of the proposed transactions (debt or derivatives) on the client in order to provide a forward looking view.

Client Credit Managers are present in various locations across Asia Pacific. They can be divided into two distinct areas - company/transactional risk and portfolio/industry risk. In both areas, Credit Risk Managers need to become credit experts and have an active dialogue with clients.

1. Company and Transactional Risk
Client Credit Managers analyse the risks associated with the transaction by conducting an in depth review of the business operations, capital structure, management, and financial performance (historical and projected). Client Credit Managers will also consider the impact of the proposed transactions (debt or derivatives) on the client. They will be part of the deal structuring team and may also be involved in the distribution of the transaction.

2. Portfolio and Industry Risk
Client Credit Managers have an industry or geographical focus and responsibility for a portfolio of names. They follow developments in the industry, consider the impact upon the portfolio and help formulate strategies for risk reduction.

Credit Portfolio Group (CPG)

A public side risk management group, this team actively manages the retained credit portfolio of the Investment Bank. The group is split into solutions, trading, management and research.

1. Credit Portfolio Solutions (CPS)
CPS prices counterpart credit risk and calculates the credit exposure of large derivative deals. It provides advice to originators on structuring and on the use of collateral to mitigate credit risk and it assesses the risks arising from proposed collateral agreements.

2. Credit Portfolio Research (CPR)
Using public information and market based indicators alone CPR develops forward-looking credit views and strategies on specific companies and industries for use within Global Credit Risk Management.

3. Credit Portfolio Management (CPM)
CPM develop forward looking strategies for actively managing the firm's overall retained credit risk. They make decisions on what to hedge or sell to manage exposure concentrations to specific industries or clients.

4. Credit Portfolio Trading (CPT)
CPT executes hedging and loan sale strategies. They manage market risk of derivatives, counterparty exposure and credit/market risk as well as developing risk and performance measures for the portfolio.