Understanding Counterparty Credit Risk

Financial teams use shorthand like IRC (Incremental Risk Charge) when discussing Basel capital rules. Developers building risk platforms must translate that tribal language into concrete requirements.

How to Get Up to Speed

  • Build a glossary as you interview subject-matter experts—capture regulatory references (Basel II.5/III) alongside system names.
  • Validate calculations with test portfolios before coding them into the engine; misinterpreting IRC definitions leads to capital misstatements.
  • Pair with quantitative analysts to review VaR, IRC, and CVA assumptions; document approval from risk governance.

Disclaimer

This article shares educational resources only. Always consult compliance, risk methodology, and legal teams before implementing or changing capital calculations.