Advanced Credit, Risk & Treasury

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20 key terms | One-line exam reference

Abbreviation	One-line meaning
ALCO	Asset Liability Committee — committee overseeing liquidity, interest-rate and balance-sheet risks.
ALM	Asset Liability Management — management of asset and liability maturities, cash flows and risks.
BCP	Business Continuity Plan — plan for maintaining critical operations during disruption.
DSA	Direct Selling Agent — agent sourcing customers or loans for a financial institution.
EAD	Exposure at Default — amount exposed to loss when default occurs.
ECL	Expected Credit Loss — forward-looking estimate of credit losses.
EL	Expected Loss — predicted credit loss based on risk parameters.
FTP	Funds Transfer Pricing — internal pricing of funds transferred between business units.
GAP	Difference between rate-sensitive assets and rate-sensitive liabilities.
HQLA	High-Quality Liquid Assets — assets readily convertible into cash with little loss.
ICA	Interest Coverage Ability — ability to meet interest obligations from earnings.
IRR	Internal Rate of Return — discount rate making an investment’s net present value zero.
LCR	Liquidity Coverage Ratio — liquid-assets requirement for short-term stress.
LGD	Loss Given Default — percentage of exposure expected to be lost after default.
MOR	Margin of Risk — additional margin maintained against assessed risk.
NSFR	Net Stable Funding Ratio — stable funding requirement for longer-term resilience.
PD	Probability of Default — likelihood that a borrower will default.
RAROC	Risk-Adjusted Return on Capital — return measured after considering risk and capital.
UL	Unexpected Loss — potential loss beyond expected loss due to uncertainty.
VAR	Value at Risk — estimated maximum loss over a period at a confidence level.

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