Credit Risk Certification

What Is Credit Risk Certification?

Credit risk certification, or CRC, is a professional certification awarded by the Risk Management Association (RMA). The credit risk certification is awarded to individuals who have worked in commercial credit and lending or loan review for at least three years and who pass the five-hour, 120-question credit risk certification exam and become active members of the Risk Management Association.

Key Takeaways

  • Credit risk certification is awarded by the Risk Management Association (RMA) and includes membership in the association.
  • The RMA defines credit risk managers as those "tasked with making decisions that impact the composition and performance of loans."
  • Certification is awarded to individuals who have worked in commercial credit and lending or loan review for at least three years and who pass the five-hour, 120-question credit risk certification exam.

How Credit Risk Certification Works

Successful applicants earn the right to use the credit risk certification designation with their names, thus improving career opportunities, professional reputation, and pay. Every three years, credit risk certified professionals must complete 45 hours of continuing education to validate their designation.

To earn certification, an applicant must prove proficiency in the following:

  • Evaluating a client's industry, market, and competitors.
  • Assessing management's ability to formulate and execute business and financial strategies.
  • Completing accurate, ongoing financial assessments of the client and its credit sponsors.
  • Assessing the strength and quality of the client's or sponsor's cash flow.
  • Evaluating and periodically inspecting collateral.
  • Identifying repayment sources and structuring and documenting credit exposure.
  • Detecting and working out problem loans.

What Is the Risk Management Association?

The Risk Management Association is a not-for-profit, member-driven professional association serving the financial services industry to advance the use of sound risk management principles in the financial services industry. It promotes an enterprise approach to risk management that focuses on credit risk, market risk, operational risk, securities lending, and regulatory issues.

Founded in 1914, the Risk Management Association was originally called Robert Morris Associates, named after Robert Morris, a signer of the Declaration of Independence and the principal financier of the Revolutionary War, who helped establish the U.S. banking system.

The Risk Management Association has approximately 1,900 institutional members. These include banks and nonbank financial institutions. In addition, the RMA has 18,500 associates who work in member institutions as relationship managers, credit officers, risk managers, and other financial services professionals.

What Is Credit Risk Management?

Risk management is the identification of risks and the efforts to minimize, monitor, and control the probability or impact of unfortunate events. Risk management’s objective is to assure uncertainty does not deflect from business goals. According to the RMA, risk management is "how a bank measures, manages, and monitors its exposures to achieve the desired return on its capital."

Risks can include uncertainty in financial markets, threats from project failures, legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attacks from an adversary, or unpredictable events.

Strategies to manage threats typically include avoiding the threat, reducing the negative effect or probability of the threat, or transferring all or part of the threat to another party.

When Is the Credit Risk Certification Exam Offered?

The CRC exam is offered in the spring, summer, and fall of each year.

What Courses Are Offered by the Risk Management Association?

Along with classes to qualify for Credit Risk Certification, the RMA offers courses, self-directed or instructor-led, on topics such as Construction Loan Management or Critical Thinking and are found on their website.

Are Practice Tests Available for the CRC Exam?

For a fee, numerous online test prep companies offer access to practice exams and mock tests for the Credit Risk Certification exam.

Article Sources
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  1. The Risk Management Association. "Credit Risk Certification (CRC)."

  2. Credit Risk Certification. "Logistics."

  3. The Risk Management Association. "What is Credit Risk Management?"

  4. Credit Risk Certification. "Continuing Education."

  5. Credit Risk Certification. "Problem Loans Resolution."

  6. The Risk Management Association. "About the Risk Management Association (RMA)."

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