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Connect the exercise to risk measurement
BLS describes financial risk specialists as assessing exposure to credit and market risk. The following project is an original learning exercise, not a claim that every risk role uses this exact model.
Write a simple credit-risk model note
Use a fictional exposure of 100,000, a default probability of 2% and loss given default of 45%. Calculate the one-horizon expected loss, then change one input while holding the other two fixed.
| Change | Expected-loss result |
|---|---|
| Base case | 900 |
| PD rises to 3%; other inputs fixed | 1,350 |
| LGD rises to 60%; other inputs fixed | 1,200 |
State the model boundary
Explain the horizon, exposure definition and zero non-default loss assumption. Distinguish the expected amount from the loss conditional on default. A note that identifies timing, scenarios or staging as missing extensions shows what a reader would need before using a fuller model.
Write a decision-relevant explanation without overclaiming
Summarize which input changed and why the output changed. Label the data synthetic and keep recommendations for a real institution outside the fictional exercise. The project can support a discussion of your learning; it does not establish a real bank’s risk level.