How to manage credit risk

Is there a better alternative to agency ratings in the measurement of credit risk? asks StatPro's Dario Cintioli

Ratings issued by the credit agencies have long been the foundation for managing credit risk. Investors, both private and institutional, have been using ratings to identify issuers that can be deemed as 'secure' and to define the allocation of investments in credit instruments. Credit risk managers use ratings, and risk management models based on them, as part of their everyday job to measure and manage credit risk. Ratings are today subject to great criticism: the failure in anticipating a number of credit events during the credit crisis of 2008 has profoundly damaged the trust in, and...