RISK MEASUREMENT 
           PROCESS
           Measuring and managing risks related to credit guarantees and 
           on-lending
                                     Fritz Florian Bachmair
                                    Junior Professional Officer
                                  Financial Advisory and Banking
        Risk measurement involves several steps
                 Defining             Understanding key characteristics 
        1    characteristics            influencing approach to risk analysis
        2     Risk analysis           Analyzing specific risk drivers 
                   Risk               Translating risk analysis into quantifiable 
        3    quantification             measures
        4 Application in risk         Using risk measures to inform risk 
              management                management tools
       Source: World Bank Treasury                                                   1
       Defining characteristics of guarantee portfolio and 
       risk exposure is first step
       1       Defining 
            characteristics
       2     Risk analysis
       3         Risk 
            quantification
       4 Application in risk 
             management
      Source: World Bank Treasury                                             2
        Key risk factors can be analyzed using different 
        approaches
       1        Defining                  Analyzing key risk factors of 
             characteristics                guaranteed entity using various 
                                            methodologies
       2      Risk analysis                  A Credit scoring
                                             B Statistical models
       3          Risk                       C Structural models
             quantification
                                             D Simulating financial 
                                                 performance
       4 Application in risk 
              management
      Source: World Bank Treasury                                                  3