Managing a loan or bond portfolio is a far cry from what it used to be, thanks to recent market developments such as the rapid growth of credit derivatives.

In fact, the changing ways of the credit portfolio management business - and the ensuing need to acutely manage risk - has prompted the International Association of Credit Portfolio Managers (IACPM) to draft a set of guidelines to help credit portfolio managers execute their increasingly complex investment duties. The IACPM has released the new guidelines, known as Sound Practices in Credit Portfolio Management, in an effort to provide those in charge of their firm's risk management with a benchmark against which they can measure their risk management practices. The sound practices cover a range of issues such as the valuation of assets and gauging vulnerability to extreme events.

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