Explanation:
An institution’s human resource policy should not play a significant role in the determination of a counter party’s credit rating.
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Q.1779 Some of the traditional analytical areas considered during the credit analysis of a counterparty include reputation, experience, reliability of management, and performance recorded in different economic situations. However, a highly competitive environment has resulted in additional areas being brought into the picture. Which of the following is NOT among the new areas considered?
A
The quality of internal governance – the competency of board members and management.
B
Prospective hidden liabilities such as pension plans, EOBi insurances, and bonuses.
C
Possible exposure of the counterparty to legal or institutional risks.
D
A company’s human resource policy, including its hiring and retrenchment procedures.
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