Applied risk management series: Counterparty risk exposure metrics

Carlos Blanco outlines an approach to counterparty risk using potential future exposure

Applied risk management - Confronting counterparty risk with exposure metrics
A better approach: using forward-looking metrics, such as potential future exposure

Traditionally, the management of credit risk at energy and commodity trading firms has largely been a passive exercise, in which a credit limit is assigned to each trading counterparty, based pr