Illustrative: likelihood by impact as columns with score as height and colour, risks moving across it as controls act

Risk Academy, led by the Nexus Consortium · Course catalogue · Finance and Economics

Banking and Financial Stability

Banking and credit risk

Banking and credit risk, taught twice over: as the working methods of the field and as its frontier since 2024, with labs on the Academy's tools, open data and the Nexus Standards.

Core course Frontier course

The discipline

01Core course · L2 Intermediate

Banking and credit risk: foundations and practice

This area covers the risks banks take and manage: credit and counterparty risk, capital and liquidity, governance and risk culture, operational resilience, climate and nature risk in lending, property finance and the models banks use.

Level
L2 Intermediate
Study time
about 24 hours (planning estimate)
Status
In authoring
Prerequisites
An L1 course in the area, or an entry review

Why now

Will shape capital requirements, credit pricing and model use at US banks once finalised. Board of Governors of the Federal Reserve System, Agencies request comment on proposals to modernise the regulatory capital framework and maintain the strength of the banking system, 19 March 2026

Learning outcomes

  1. Define probability of default and the other key terms of the discipline and use them correctly in a written case
  2. Explain credit risk and expected loss and counterparty risk with a worked example and its source
  3. Apply the discipline's method to a documented case and explain each result with its source
  4. Analyse a named case against capital and liquidity regulation, stating evidence, date and limits

Modules

  1. Credit risk and expected loss
    • Credit risk and expected loss
    • Counterparty risk
    • Capital and liquidity regulation
  2. Bank governance and risk culture
    • Bank governance and risk culture
    • Climate and nature risk in banking
    • Housing and property finance
  3. Islamic banking
    • Islamic banking
    • Bank operational resilience
    • Model risk in banking
  4. Lab: the discipline's method
    • A loan's probability of default and loss given default set the expected loss that pricing and provisions cover; the asymptotic single risk factor model turns the same inputs into the unexpected loss that capital must absorb.
    • Work the method through a documented case and explain each result
    • Read the method's sources and stated values

Labs with Academy tools

Nexus Standards

Teaches

  • NRS-F1 Financial stability and systemic financial risk
  • NRS-F2 Banking climate, nature and transition risk
  • NRS-M8 Method fabric: Financial risk

Relies on

  • NS-1 The UNI and the artefact catalogue
  • NS-16 UNI application profile (how articles, documents, code, data, APIs and interfaces carry the UNI)
  • NRS-C1 Risk vocabulary and ontology
  • NRS-C2 Risk assessment method
  • NRS-C4 Risk data model, identifiers and exchange
  • NRS-C5 Scenarios and stress testing
  • NRS-C6 Systemic and cascading risk
  • NRS-C8 Evidence, uncertainty and provenance

Assessment

  • 40%Lab recordWork the discipline's method through a documented case and explain each result with its source and date
  • 40%Case memoApply the discipline's methods to a named place or organisation, stating evidence and limits
  • 20%Key terms checkShort answers on the key terms, marked against the definitions

Delivery

  • Self-paced online, with the labs in the browser
  • Cohort study over six to eight weeks, with a weekly lab review
  • Co-delivered with a partner institution, inside its own courses

Partner on this course

  • Co-teach a module and bring a current case from your work
  • Host a cohort for your learners, with your own schedule and review
  • Contribute a lab: a dataset your institution publishes openly, or a model
  • Review the course content and its references before it opens
  • Translate the course and adapt its cases to your region

How institutions and experts take part

In the Academy LMS

Course on the learning platform
Intermediate, 4 topics
Cohort group
A community group for each cohort of learners
Achievement
Recorded on completion of the assessed work

References

  1. Board of Governors of the Federal Reserve System, Agencies request comment on proposals to modernise the regulatory capital framework and maintain the strength of the banking system, 19 March 2026
  2. Gordy, A risk-factor model foundation for ratings-based bank capital rules, 2003
  3. Merton, On the pricing of corporate debt: the risk structure of interest rates, 1974
  4. Basel Committee on Banking Supervision, An explanatory note on the Basel II IRB risk weight functions, 2005
02Live map

Activity and exposure in the Gulf of Mexico coast

Night-time lights and population, a proxy for economic activity, with the floods and fires that put assets at risk, over the Gulf of Mexico coast.

The interactive map needs JavaScript; the layer list and sources are below.

Layers 2

Activity and exposure

Latest available

NASA GIBS / EOSDIS · ASTER GDEM (METI, NASA) · Blue Marble (NASA) · © OpenStreetMap contributors (ODbL) · Natural Earth

Loading the latest NASA imagery.

Drag to move. Ctrl or ⌘ and scroll, pinch or the buttons to zoom; hover for the values under the pointer; reset returns to the region.

Activity and exposure, framed on the Gulf of Mexico coast.Satellite and model products as NASA publishes them, each with its own date. They are indicators, not assessments of any place.

Data: NASA GIBS · ASTER GDEM · Blue Marble · © OpenStreetMap contributors · Natural Earth · NASA EONETSources and licences

  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • VIIRS Black Marble night-time lights, NASA Goddard Space Flight Center; distributed by the NASA Level-1 and Atmosphere Archive and Distribution System (LAADS DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Center for International Earth Science Information Network (CIESIN), Columbia University. 2018. Gridded Population of the World, Version 4 (GPWv4): Population Density, Revision 11. NASA Socioeconomic Data and Applications Center (SEDAC). Licensed under CC BY 4.0. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). doi:10.7927/H49C6VHW. CC BY 4.0
  • VIIRS near-real-time products (flood, land surface temperature, snow cover, corrected reflectance), NASA LANCE; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • NASA Fire Information for Resource Management System (FIRMS), VIIRS 375 m active fire product, NASA LANCE; vector tiles via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • ASTER GDEM is a product of METI and NASA (ASTER Global Digital Elevation Model V003, NASA LP DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). Cite as: NASA/METI/AIST/Japan Spacesystems and U.S./Japan ASTER Science Team (2019). ASTER Global Digital Elevation Model V003. doi:10.5067/ASTER/ASTGTM.003. NASA open data
  • Made with Natural Earth. Free vector and raster map data @ naturalearthdata.com. Public domain
  • © OpenStreetMap contributors (ODbL), via NASA GIBS (coastlines, boundaries, roads and place names). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). ODbL
  • Blue Marble, NASA Earth Observatory; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Context on the globe and flat map: coastlines, boundaries, roads and place names from NASA GIBS reference layers (OpenStreetMap data, ODbL, © OpenStreetMap contributors); Blue Marble imagery as an optional base; 3D terrain and the elevation read-out from the ASTER GDEM elevation colour index (5 m to 200 m classes, exaggerated for legibility). Boundaries are drawn as published and imply no position on any territory.
  • Globe: MapLibre GL JS 6.9.1, BSD-3-Clause, © MapLibre contributors.
  • Live events: NASA Earth Observatory Natural Event Tracker (EONET); events are indicative and keep their original source links.
  • NASA GIBS: We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS).
  • Optional layers (4 sources in the layer list: live, forecast, observed and context) print their provider credit on the map and here when switched on; forecasts are model output and derived indices are estimates.

Layers and dates

  • Night-time lights, daily: VIIRS Black Marble (VNP46A2), NASA LAADS DAAC · 12 Oct 2026
  • Population density, 2020: Population: CIESIN, Columbia University, Gridded Population of the World v4.11 (2018), NASA SEDAC, CC BY 4.0 · static
  • Flood water, 3-day composite: VIIRS Global Flood Product, NASA LANCE · 14 Oct 2026
  • Active fires and thermal anomalies: VIIRS NOAA-20 375 m (FIRMS), NASA LANCE FIRMS · 13 Oct 2026
  • Land surface temperature, day, 8-day composite: VIIRS NOAA-20 Level 3, 8-day, NASA LANCE · 14 Sep 2026

03How learning runs

How learning runs, as a process you can run

Select a scenario and press Play: course, pathway, practice, faculty, cells and record.

04What is changing

Frontier course · L3 advanced, programme courses and standards

Banking and credit risk: frontier methods

The methods, data, tools and studies that changed banking and credit risk between 2024 and 2026, taught by reproducing them on open data.

Level
L3 Advanced
Study time
about 28 hours (planning estimate)
Status
Planned
Prerequisites
Banking and credit risk: foundations and practice; Working knowledge of a scripting language (Python or R) for the labs

Why now

Will shape capital requirements, credit pricing and model use at US banks once finalised. Board of Governors of the Federal Reserve System, Agencies request comment on proposals to modernise the regulatory capital framework and maintain the strength of the banking system, 19 March 2026

Learning outcomes

  1. Explain what changed in banking and credit risk since 2024 and cite the studies, data or rules behind each change
  2. Reproduce US agencies propose revised capital framework for banks on open data and state the uncertainty of the result
  3. Evaluate a 2024 to 2026 study: its question, data, method, limits and what it changes for practice
  4. Design an analysis that combines a frontier method with the faculty's instruments, and justify each choice

Modules

  1. US agencies propose revised capital framework for banks
    • The Federal Reserve, FDIC and OCC proposed three rules to implement remaining Basel III elements with a single risk-based calculation for the largest banks, revise standardised risk weights and update the GSIB surcharge, modestly lowering overall capital.
    • Will shape capital requirements, credit pricing and model use at US banks once finalised.
    • Board of Governors of the Federal Reserve System, 19 March 2026
  2. Banking supervisors publish a voluntary climate-related risk disclosure framework
    • The Basel Committee issued a voluntary Pillar 3-style framework for banks to disclose climate-related financial risks, with qualitative tables and quantitative templates, leaving each jurisdiction to decide whether to implement it.
    • Gives banks and supervisors a common template for reporting transition, physical and concentration risk, where adopted.
    • Bank for International Settlements, 13 June 2025
  3. EBA finalises guidelines on managing ESG risks in banks
    • The European Banking Authority set requirements for identifying, measuring, managing and monitoring ESG risks, including plans covering at least a ten-year horizon, applying from January 2026 and January 2027 for small institutions.
    • Brings climate and other ESG risks into credit risk appetite, ICAAP and transition planning for EU banks.
    • European Banking Authority, 9 January 2025
  4. Reproduction lab
    • Extend the discipline's method with one frontier method and compare its results
    • State the uncertainty and the limits of the result
    • Peer review against a shared checklist
  5. Technology that helps and the risks it carries
    • AI models, tokenisation and regulatory technology.
    • Model risk, cyber accumulation, exposure to quantum attacks on cryptography, and concentration on third-party cloud providers.

Labs with Academy tools

Nexus Standards

Teaches

  • NRS-F1 Financial stability and systemic financial risk
  • NRS-F2 Banking climate, nature and transition risk
  • NRS-M8 Method fabric: Financial risk

Relies on

  • NS-1 The UNI and the artefact catalogue
  • NS-16 UNI application profile (how articles, documents, code, data, APIs and interfaces carry the UNI)
  • NRS-C1 Risk vocabulary and ontology
  • NRS-C2 Risk assessment method
  • NRS-C4 Risk data model, identifiers and exchange
  • NRS-C5 Scenarios and stress testing
  • NRS-C6 Systemic and cascading risk
  • NRS-C8 Evidence, uncertainty and provenance

Assessment

  • 50%Method reproductionReproduce one frontier method on open data and state the uncertainty of the result
  • 30%Study reviewA critical review of a 2024 to 2026 study: question, data, method, limits, what it changes
  • 20%Peer reviewReview two other learners' reproductions against a shared checklist

Delivery

  • Self-paced online, with the labs in the browser
  • Cohort study over six to eight weeks, with a weekly lab review
  • Co-delivered with a partner institution, inside its own courses

Partner on this course

  • Co-teach a module and bring a current case from your work
  • Host a cohort for your learners, with your own schedule and review
  • Contribute a lab: a dataset your institution publishes openly, or a model
  • Review the course content and its references before it opens
  • Translate the course and adapt its cases to your region

How institutions and experts take part

In the Academy LMS

Course on the learning platform
Expert, 5 topics
Cohort group
A community group for each cohort of learners
Achievement
Recorded on completion of the assessed work

References

  1. Board of Governors of the Federal Reserve System, Agencies request comment on proposals to modernise the regulatory capital framework and maintain the strength of the banking system, 19 March 2026
  2. Bank for International Settlements, Basel Committee publishes framework for voluntary disclosure of climate-related financial risks, 13 June 2025
  3. European Banking Authority, The EBA publishes its final Guidelines on the management of ESG risks, 9 January 2025
  4. Gordy, A risk-factor model foundation for ratings-based bank capital rules, 2003
  5. Merton, On the pricing of corporate debt: the risk structure of interest rates, 1974
  6. Basel Committee on Banking Supervision, An explanatory note on the Basel II IRB risk weight functions, 2005
05Take part

Take part in the work

Start from who you are.

06Questions

Questions, answers and key terms

Is the course free?
Yes. Every course and learning material of Risk Academy, led by the Nexus Consortium, is free to study, self-paced or with a cohort. Ordinary participation has no fee; paid work, internships and fellowships are separate arrangements.
What does completing a course give me?
A completion record: the course, its version, the date and what was assessed, private by default and shared by you. It stacks into discipline, department and programme achievements. A record states what was studied and assessed and does not certify competence; it is not a licence, a professional title or an employment status.
Where do the data and the places come from?
Every faculty teaches on a twin of a real place built from open data; each layer carries its provider, licence and date, and every result on the Academy states its source. Maps and figures are indicators for teaching, never an assessment of a place.
How do I take part beyond the course?
Form a competence cell of three to seven people, study a shared pathway, take a supervised assignment in the National Working Groups, or bring a cohort from your institution. For organisations.

Key terms

Term

Probability of default

The likelihood that a borrower fails to meet its obligations over a period.

Term

Loss given default

The share of an exposure lost when a borrower defaults.

Term

Exposure at default

The amount owed at the time of default.

Term

Risk-weighted assets

Assets weighted by their risk, used to set minimum capital under the Basel framework.

ReportsContribute

Contribute evidence from this page.

Reports is the Consortium's quarterly publication. What you know about this subject can become evidence, a case or a correction in the next edition, credited to you and published under CC BY 4.0 where it is your own work.

Risk Academy
Related

Around Banking and credit risk: courses

Risk Academy

Study banking and credit risk with us, or teach it

Every course is free and open. Institutions and experts can co-teach, host a cohort, contribute a lab or review a course before it opens.

Browse the course catalogue Partner with the Academy
Risk Academy

Courses · practice · credentials

Not for profit

Our articles, maps and twins are free to read and free to republish. Readers and partners keep it that way.

Support our work

Who funds us

Risk Academy is a not-for-profit institution. To ask who funds a piece of work, use the funding questions form.

Independence

Editors and the expert reviewers named on each article decide what we publish. Funders and partners do not review or approve articles before publication.

Corrections policy

Licence

Articles: CC BY 4.0. Figures, maps, twins and data: CC BY 4.0. Other uses: ask through the permissions form.

Privacy choices