How frequently should counter party credit risks be reviewed?
Recent markets have shown that the financial strength of companies is usually not static and can in some instances change for the worse very rapidly. The frequency of review may depend on the relative strength of the counter parties and the current market conditions and level of economic uncertainty. Monitoring of credit exposure should be increased during volatile market conditions. That said, key indicators should likely be reviewed weekly during normal conditions. Significant changes in indicators or negative news that suggest possible deterioration of financial health of a counter party would dictate vigilance and close watch of the counter party exposure.
