Company: Moody's Analytics
Category: Credit Risk
Published: 21 June 2016
The incoming IFRS 9 regulation provides for the use of macroeconomic forecasts and probability-weighted outcomes, particularly when accounting for the impairment of financial assets. Indeed, the spirit of IFRS 9 suggests that finance officers should be more forward-looking in their recognition of credit losses on a firm’s balance sheet, with the macroeconomy often taking a central place in any impairment forecast.
This white paper explores how to develop a framework that addresses the probability-weighted aspects of IFRS 9 and answers questions about the practical use of alternative scenarios.