What is market-value-based portfolio model in SAP FS-BA-PM-CR - Credit Risk?

SAP Term: market-value-based portfolio model

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: Includes in portfolio distribution any defaults on the constituents of a portfolio, and any changes in value that arose due to changes in credit rating. In this regard, the default represents merely the most extreme worsening in credit rating. A market-value-oriented portfolio model assumes that the net present value is used in the calculation of the exposure. NPV, market to market

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• Key Concepts: 
  The market-value-based portfolio model is a component of the FS-BA-PM-CR Credit Risk module in SAP. It is a tool used to assess the credit risk of a portfolio of assets by taking into account the current market value of each asset. This model allows for a more accurate assessment of credit risk than traditional methods, as it takes into account the current market conditions and the potential for changes in value over time. 
  
  How to use it: 
  The market-value-based portfolio model can be used to assess the credit risk of a portfolio of assets. To use this model, users must first input the current market value of each asset in the portfolio. The model then calculates the potential for changes in value over time and provides an assessment of the credit risk associated with the portfolio. 
  
  Tips & Tricks: 
  When using the market-value-based portfolio model, it is important to ensure that all assets in the portfolio are accurately valued. This will ensure that the assessment of credit risk is as accurate as possible. Additionally, users should regularly update the values of assets in order to ensure that the assessment remains up to date. 
  
  Related Information: 
  The market-value-based portfolio model is part of SAP’s FS-BA-PM-CR Credit Risk module. This module also includes other tools such as stress testing and scenario analysis, which can be used to further assess credit risk. Additionally, users can access additional resources such as tutorials and user guides to learn more about how to use this module effectively.