In the measurement of Credit Risk, models may be classified into three different dimensions. What are such dimensions?

In the measurement of credit risk, models may be classified along three different dimensions. They are the techniques employed, the domain of applications in the credit process and the products to which they are applied. Techniques Employed The following are the more commonly used techniques: Econometric Techniques Neural networks Optimisation Rule-based or expert systems Hybrid Systems Domain of Application These models are used in a variety of domains: Credit approval Credit rating determination Risk premia Early warning Common credit language Collection strategies Credit Risk Models: Approaches The literature on quantitative risk modelling has two different approaches to credit risk measurement. The first approach is the development of statistical models through analysis of historical data. This approach was frequently used in the last two decades. The second type of modelling approach tries to capture distribution of the firm's asset-value over a period of time.