Counterparty Exposure: Sometimes Simple Is Good Enough

A commentary on the approaches to measuring counterparty risk and why all institutions need not be leading edge.

With so much emphasis placed on changes that the major banks have to make in calculating their credit exposure and capital it is easy to forget that most of the world’s banks are not systemically important nor derive a huge amount of business from complex derivative products. Most financial institutions are not banks at all - asset managers, insurance companies and other