At the height of the banking crises the majority of counterparty credit losses stemmed from the decline of counterparty credit quality. As a result, the Basel Committee on Banking Supervision took a more proactive stance towards counterparty risk. The introduction of credit valuation adjustment (CVA) into the Basel III framework has forced the banking industry to find appropriate solutions to complex implementation challenges. These challenges differ depending on the size, compliance level and strategic direction of the bank. The success of implementation depends heavily on an organisation's ability to identify and fill IT, data and performance management gaps.
This white paper provides practical help for banks looking to implement CVA projects effectively. It takes into consideration all the drivers behind CVA, the different approaches and the technological implications of strategies adopted.