Homeless Youth Facilitators and Barriers

Homeless Youth Facilitators and Barriers When considering the problem of homelessness, we may think of the stereotypical skid row bums, drug addicts, or perhaps the mentally ill living on the sidewalks begging for change from passerby (Letiecq, Anderson, Koblinsky, 1996). All people that are homeless do not live on the streets. Homeless people can be someone who stays with a friend or a family member, someone living in overcrowded conditions, someone living in poor conditions that may affect their health, someone living away from their loved ones because of certain conditions. Many of these people are youth who lacks proper shelter. Homelessness among young people is a major social concern in the United States. Youth homelessness is not a new phenomenon and it has become more and more severe over the years. We ask what youth homelessness is. According to the National Coalition for the Homeless, homeless youth are individuals under the age of eighteen who lack parental, foster, or institutional care (2008). Homeless youth i ncludes runaways, throwaways, and street youth. They are also referred to as unaccompanied youth (National Coalition for the Homeless, 2008). ÂÂ  Homelessness for youth has been an ongoing issue and is at greater risk due to the greater vulnerability due to the background factors related with their life style. Homeless youth can be found anywhere throughout the U.S. and most of these youth are age 18 or below. Many of these homeless youth comes from low-income communities or from dysfunctional families. Although the prevalence of youth homelessness is difficult to measure, researchers estimate that about 5 to 7.7 percent of youth- about 1 million to 1.6 million youth, under the age of 18 experience homelessness each year (Pope, 2013). As an estimated report by the Office of Juvenile Justice and Delinquency Prevention in the US Department of Justice, there are about 1,682,900 homeless and runaway youth (National Coalition for the Homeless, 2009). ÂÂ  Children and youth identified as homeless by the Department of Education in FY2000, only 35% lived in shelters; 34% lived doubled-up with family or friends, and 23% lived in motels and other locations (National Coalition for the Homeless, 2009). These children and youth may not immediately be recognized as homeless and are sometimes denied access to shelter or the protections and services of the McKinney-Vento Act (National Coalition for the Homeless, 2009). Youth that are homeless can become this way for a variety of reasons. Many youth become homeless as a result of family problems and financial difficulties. Some of the causes of homelessness are due to physical or sexual abuses, family that has a drug addiction, or because of parental neglect. Often the young people experience more than one of these factors in their homes. For example runaways usually leave their home without letting their parents or a legal caregiver know about their whereabouts. They often tend to have a history of hardship in school and behavioral problems with other peers. Children from families that have always been poor are likely to be worse off than children in families that experience sudden hardship due, for example, to the recession and foreclosure crisis (NCSL, 2103).ÂÂ   Parents are the majority of the time a primary reason these youth becomes homeless. A dysfunctional family can be one of many reasons why these youth would leave their home. The youths become homeless due to some disruptions of their families caused by divorce. If the families break up, the youths are forced to search for new places to live and this becomes very difficult for them. They may lack suitable places to go or stay as they may lack the required funds.ÂÂ  The number of homeless youth has been growing and it has become a serious problem in our society. In a study, 46% of runaway and homeless youth had been physically abused and 17% were forced into unwanted sexual activity by a family or household member (National Coalition for the Homeless, 2007). Some of these young people becomes homeless when their families suffers financial crisis resulting from lack of affordable housing, no job opportunities, no medical insurance or inadequate welfare benefits. ÂÂ  They are not only in need of money, but they are also in need of attention and support. Youth homelessness face gets involve in a high-risk survival behaviors in order to meet their basic needs. Youth on the streets fall prey to substance abuse, develop mental illness, and victimization. Young homeless people are most likely to have high-risk behaviors in such like engaging in unprotected sex, having multiple sex partners and gain access to substance abuse. Some of the homeless youth are forced to involve themselves in prostitution in order to obtain their daily bread and survival. For instance, they participate in unsafe sex in the exchange of basic necessities such as food, shelter and money. This is so because the greater percentage of the youths is sexually active at the average age of thirteen and fourteen years.ÂÂ   Homeless youth use prostitution as ways to survive, in which it can cause lots of unwanted pregnancies. Chronic health conditions, including asthma, other lung problems, high blood pressure, tuberculosis, diabetes, hepatitis, or HIV/AIDS, are prev alent among homeless youth (Pope, 2013). To obtain money, food, or a place to sleep, homeless youth may panhandle or resort to extreme measures such as theft, drug sales and abuse, prostitution, or survival sex (Pope, 2013). Homeless youth can also become mentally unstable. Mental health problems may develop as a result of violence or other trauma experienced while homeless (Beharry, 2012). Homeless youth can be face with traumatic and stressful events which can cause them to be in constant fear or become mentally unstable. They have a greater risk of severe anxiety and depression, suicide, poor health and nutrition and even low self-esteem. Drug and alcohol use are often seen by homeless youth as self-medication for depression and other mental health issues, as a social outlet for connection with peers, or as an otherwise adaptive coping strategy for survival on the streets (Christiani, Hudson, Nyamathi, Mutere, Sweat, 2008). These mental problems can or most likely interfere with their activities such as learning and communicating in school. ÂÂ  Homelessness can lead to an interruption of their education and therefore affects their future ability to live comfortably and independently. These youth that lacks education can set them to experience s evere financial and emotional challenges as not being able to secure any employment in the United States of America. The presence of uneducated and unemployed homeless youths affects the development processes of the societies. Homelessness can affect their educational opportunities for future success. Homeless children and youth who are able to enroll in school still face barriers to regular attendance: while 87% of homeless youth are enrolled in school, only 77% attend school regularly. (National Coalition for the Homeless, 2009). Youth that are from families who are struggling seems to move around a lot in search of something that is affordable for them such as housing and for employment. These children or youth experiences changes of school messes up their education because their family has to find a place where shelter is affordable for them. According to the Institute for Children and Poverty, homeless children are nine times more likely to repeat a grade, four more times more likely to drop out of school, and three times more likely to be placed in special education programs than their housed peers (National Coalition for the Homeless, 2009). ÂÂ  Homeless youth need access to services that will help them regain stability in their lives, such as obtaining a job and affordable housing. What does homeless youth need? They would need housing which includes shelter, transitional living programs, and supportive housing that is permanent for youth with mental illness. Homeless youth benefit from programs that meet immediate needs first and then help them address other aspects of their lives.ÂÂ   States can provide homeless youth with access to educational outreach programs, job training and employment programs, transitional living programs, and services for mental health and life skills trainings (NCSL, 2013). There are many programs run by government and voluntary organizations that are aimed to help homelessness by providing advice, financial support, a place to stay and other assistance. There are programs such as housing subsidy, local or federal government assistances. When there is no shelter it becomes a problem for these youth. A lack of affordable housing and limited scale of housing assistance program have contributed to the current housing crisis and to homelessness (National Coalition for the Homeless, 2009). Income and housing-related factors continue to play a significant role in the growth of homeless families (Anderson Koblinsky, 1995). When parents cannot provide for their kids, these youth are also affected as well. Housing is the key to ending homelessness to help these young people and their families. There are only a small percentage of all homeless youth that seek shelter (Pope, 2013). There are ways to help house these youth. Youth housing programs include group homes, residential treatment, host homes, shared homes, youth shelters, and community-based transitional living programs (NCSL, 2013). As according to LaKesha P. Pope, there are the five strategies to house homeless youth (2013): Develop stable housing without time limits specifically designed to meet the needs of youth which link services for future independent living. Include set-aside unites for youth in existing or newly developed mainstream affordable housing. Allow youth to be integrated into the local Continuum of Care planning and implementation process and as consumers of affordable housing stock. Market housing resources in places where youth will see them. Educate private landlords about the special needs of homeless youth and the existence of programs willing to offer supervision and assistance to youth tenants. These strategies can bring in some positive attitudes to these youth when they know that there is some kind of help or assistance that is set up. What homeless youth need the most is a home. Programs are out to help these youth but it can be a challenge to get the services. It can be a challenge for homeless youth to find help and assistance shelters. They can lack transportation to get to their destination for help. Many youth feel that agencies favors are usually with people who need help the least. Connecting youth to resources is a critical service and especially when a program that lacks funding to provide shelters. A barrier that homeless youth can experience in accessing housing are (Pope, 2013): No rental history Age discrimination No job or not enough income to afford market-rate rents Lack of standing to sign lease Trouble with mobility due to few public transportation options Exposure to domestic violence, sexual assault and adults who solicit youth for illegal activity in exchange for housing Teen parents Past abuse and trauma resulting in mental or cognitive disabilities Failure to find housing with proficiencies in various youth cultures Youth often find themselves homeless because of family breakdowns, system failures, and marginal resources (National Alliance to End Homelessness, 2013). Homeless youth who are not able to live with their families, other options should be made available for them to contribute and take care of themselves. However, we cannot change how people treat their youth, but we can try to change the outcome of a youths life. There are many risks that these youth can face being on the streets with no shelter or help. Some youth may never want to find help or look for assistance but we as human service worker, should try to reach out the best we can.

Which May Influence the Health and Development of Babies

3500 Unit 18 Task 1: (E1) Summarise the factors which may influence the health and development of babies in the first year of their lives. There are many factors that can influence the heath and development of babies in the first year of there life some factors can occur in the antenatal period before the child is born, some perinatal during the birth and some postnatal after the birth. An example of an antenatal factor is smoking. If the mother smokes during pregnancy the baby is more likely to be born premature with a low birth weight.They also can have poorer lung function and have organs that are smaller than a baby that is born to a mother that does not smoke. Another example of an antenatal factor is stress and worry. ‘Stress experienced by a woman during pregnancy may affect her unborn baby as early as 17 weeks after conception, with potentially harmful effects on brain and development, according to new research. ’ The cord being wrapped around the babies’ neck is a factor that can affect the perinatal period. If this does occur sometimes the cord will be cut before the birth of the baby can precede, other to this an emergency caesarean will be performed. When the cord compression is severe or long standing, the baby may have low Apgars and suffer brain damage, which could result in a degree of mental retardation or cerebral palsy. If the compression is severe enough and labor has not yet begun, the baby can die in uterus and be stillborn. Being born premature is a factor that can affect a baby during the birth. Premature birth is refers to a baby that is born less than 37 weeks of the pregnancy. Babies that are born premature are at greater risk for short and long term complications, including disabilities and impediments in growth and development.If the child’s mother suffers with postnatal depression this can be a factor that can affect the baby. As a result of this factor the child’s mother might not be able to bond with the child therefore the child will not feel safe and secure and also they may not be able to care for their child to their full potential. Also, although postnatal depression is more common in women, men can be affected too. The birth of a new baby can be stressful for both parents and some fathers feel unable to cope, or feel they are not giving their partner the support she needs.Abuse is a factor that can affect the baby in the antenatal period. It can leave the baby with lifelong affects such as confidence issues, depression and enabling them to make positive relationships. The baby may also fall behind in their expected stage of development. ‘Emotional problems such as anger, hostility, fear, anxiety, humiliation, lowered self-esteem and inability to express feelings. ’ Are also other affects of abuse towards a baby? E2: describe how indoor and outdoor environments for babies can be made safe, reassuring and stimulating.Write about what needs to be considered and provided in the setting so babies are safe, stimulated and feel reassured in their environment. This may include: relevant policies and procedures, attractive, reflects those that use it, indoors/ outdoors provision, age/stage equipment/resources†¦Ã¢â‚¬ ¦. Whilst children are playing indoors and outdoors there has to be many things that the practitioner has to consider and put in place. Although both environments have to be enjoyable, fun and stimulating they also have to be safe and secure for the babies.A policy is one thing that has to be put in place and used correctly in order for the environments to be safe and secure. An example of one current policy that is put in place in settings is the Health and Safety policy. The Health and Safety policy gives guidelines on how to keep children, staff, visitors and parents safe whilst attending the setting. An example of a procedure that will be stated under this policy is the signing in and out procedure. This procedure is put in place to make sure that no persons can enter the setting without reason or permission to be there.Equipment and resources in the setting needs to be appropriate for the age of the babies. An example of this which I have seen in the setting is paint. The paint that had been purchased for the setting was not age stage appropriate for the babies to do finger painting with which is what the paint was intended for therefore the paint could not be used. Staff ratio is important whilst keeping the children safe indoors and outdoors. In order to be able to meet all the children’s care needs and give the correct supervision then there needs to be the correct number of staff to the number of children that are in the setting.E3: State the choosen age group. Give information about the expected stage of overall development and identify changes which can be usually expected in the next two months. All babies are individual and will develop at different rates all babies will not develop to the same stage at the same age. A baby at the age of 3 months will be expected to be able to hold a rattle for a few seconds but they usually can not look at the rattle at the same time. By being able to do this the baby has developed on their physical skills. Within the next two months of their lives the baby will be expected to develop to the next expected milestones.At the end of four months the baby can now roll from their back to front. By being able to do this the infant has developed on their motor skills. Also the baby can now push up on his forearms and lift their head and chest 90 degrees when lying on their stomach this position only requires a slight lean to either side to become a roll. These two skills will help the infant to develop and slowly begin to crawl. An infant at the age of 5 months is now beginning to gain some balance and if the infant is sat on their parents lap or on the floor they might be able to sit for a few second unaided.If the parent places the child’s legs in a v shape and gives the baby a toy as distraction then they may be able to sit for a little bit longer each time. By doing this the parent is helping them to develop on their balance. E4: Explain how two different play activities/experiences can support the overall development of the baby described in E3. Write about two play opportunities which are developmentally appropriate for The baby described in E3. These may include everyday experiences such as Bath time or play activities. Identify how the overall development of the baby is helped by each experience/activity.A play activity such as laying the child under a play gym would help to support all developmental skills of a baby age 3 months. One example of the skills that are being built is physical development as they will be improving upon their fine motor skills such as their grasping reflects. Social and emotional skills are another area of development that the baby will be building upon. The practition er will be sat with the baby whilst they are under the play gym talking and communicating with to them, this will help to form an attachment between the practitioner and the baby. This activity is also supporting Bowlby’s attachment theory.At 5 months an activity that will help developmental skills is sitting the baby on the floor and providing them with a distraction such as toys to help them to be able to sit up unaided. A developmental skill that is going to be developed from this activity is the babies’ physical development. Intellectual development is another skill that is going to be built upon because the child will be exploring the different objects that the practitioner has provided them to play with this also links to the physical development as the child will be grasping the different objects while sat upright.E5: Describe the role of the practitioner in meeting the particular needs of babies in the chosen type of setting (group childcare) Give information a bout the responsibilities of the practitioner in EITHER group care OR home-based care. Responsibilities should relate to the chosen care setting and could include: establishing relationships with baby and parents, identifying and planning to meet baby's holistic needs, observation and recording of development, supervision, resources/equipment, routines, other children†¦Ã¢â‚¬ ¦.Meeting the care needs of the babies that are attending the setting is the main role of the practitioner. To be able to do this the practitioner has to establish positive professional relationships with the babies and their parents. The practitioner needs to establish this relationship to be able to meet the babies’ needs this will help this happen because the practitioner will be able to learn the babies’ routine and get to know the baby holistically. Good communication skills will aid this to happen.By getting to know the baby the practitioner will be able to plan to meet the baby’s needs. The practitioner can get to know the child holistically. Observations can be used to plan and also to support the practitioners planning. By doing regular observations the practitioner can observe the child and from the observation can gather an understanding of where the child is at in there development and use this information to meet the particular needs of children in the setting. They can then use the findings from there observation to plan for lessons, activities and the future. To monitor on-going development and plan for the next stage it is important to check that development is progressing steadily. With a good understanding of development patterns you can plan for the next stage. ’ The role of the practitioner is to also to provide the correct resources and equipment to meet the child’s needs and that provide stimulation. E6: Show how the child protection policies and procedures in the setting protect and safeguard the babies. Information about how c hild protection policies and procedures of the setting protect babies.This may include: observation/recording/reporting, recognising signs of abuse, confidentiality, rights of child, welfare of child, work with parents, teamwork†¦Ã¢â‚¬ ¦. Having implemented child protection policies and procedures in the setting will ensure that babies are always safeguarded whilst being in the setting. Child protection policies and procedures are put in place to protect the rights of the child, ensure the welfare of the child is being kept up to standards and also making sure that there needs are being met appropriately.It is also important that all practitioners in the setting understand their role regarding child protection. It is also vital that everyone is aware and follows the policies and procedures that are put in place to protect the baby’s. There are many forms of abuse that a child can be subjected to and that are subjected to. As a practitioner safeguarding children you need to be aware of these signs and be able to pick on them to be able to keep the child safe. All children, whatever their ages, culture, disability, gender, language, racial origin religious beliefs and/or sexual identity have the right to protection from abuse’. ‘All staff (paid/unpaid) working in sport have a responsibility to report concerns to the appropriate officer’. An example of a form of abuse that a child may be experiencing could be is physical abuse. A sign of this abuse that could help the practitioner to pick on the abuse that the child is experiencing is ‘Has unexplained burns, bites, bruises, broken bones, or black eyes’.Although one single sign does not prove child abuse is occurring in a family, but a closer look at the situation may be necessary if these signs appear repeatedly. Confidentiality needs to be abided by all the time during child protection. Not only will it help to keep the child safe confidentiality will help to keep the practitioner safe and cover themselves. Although if the practitioner thinks that a child is at harm then they need to approach the settings safeguarding officer and let them know what they think could be happening.Teamwork and working alongside parents are also essential to make sure that the child protection policies and procedures are successfully implemented in the setting. Whilst working with babies and keeping them safe the practitioner might have to work with other professionals such as social workers. Therefore the practitioner will have to make sure that they have good communication skills and that they are taking regular observations so that they are able to pass on information regarding the child to be able to keep them safe.E7: Explain the importance of the key worker system. Give reasons why well planned care routines and the key worker system benefit babies in early year's settings. This may include: links with home, individual needs identified/met, security and consis tency, babies learn to predict what is to happen, overall development and learning, relationships with parents, shared information, confidence and trust†¦Ã¢â‚¬ ¦. A baby needs routine, stability, safety and life’s basic essential to be able to develop and thrive therefore a well planned care routine is vital.During the time the baby spends in day care their home routine needs to be brought into the setting as this will help the child to make a clear link to the routine that they follow at home this will help the baby to be settled and feel safe. Having a well planned care routine will help the practitioner to meet the babies’ individual needs. The baby will be having nap time when necessary, having feeds at the correct time and also be receiving any medication that is needed to be administrated. As a result of all these things the child will be helped to feel security and consistency.Having a key worker system in the setting will allow all the needs of the baby to be met and will also give the baby the security, consistency and routine the need. ‘This means that each member of staff has a group of children for whom she/he is particularly responsible. Your child’s key person will be the person who works with you to make sure that what we provide is right for your child’s particular needs and interests. When your child first starts at the pre-school, she/he will help your child to settle and throughout your child’s time at pre-school, she/he will help your child to benefit from the pre-school’s activities. Having the key worker system in place will help ensure that a close professional relationship is developed between the staff and the baby’s parents so that the needs of the baby are made paramount and that the baby’s needs are met to the parents’ wishes. Confidence and trust will be built through the key worker system and well planned care routines because the baby’s needs are bei ng met and there is a good relationship developing then confidence and trust will come as a result of this which will help the well planned care routine to be affective.The practitioner must also abide by the Care Standards Act 2000. This act sets national standards that the setting has to meet whilst caring for the children in their setting. 219 227 235 531 595 D: Consider how the care routines can enhance the overall development of babies from birth to 12 months. A development of E7. Give examples of how the overall development of babies can be supported during care routines, eg as well as giving babies food and drink, meal times can be very enjoyable and stimulate the social and emotional development of babies because†¦Ã¢â‚¬ ¦.Well planned care routines can not only meet the individual needs of babies from birth to 12 months they also enhance their overall development. Nappy changing is made to be a part of a well planned care routine and is a part of the child’s care routine that not only has to be done to meet the baby’s individual needs but that can also help to enhance development in other areas. During nappy change the practitioner can communicate with the baby through singing and talking. As a result of doing this the practitioner is helping to develop on the baby’s language and social and emotional development.As the practitioner is talking and singing to the child they are also helping to build a bond between themselves and the child therefore if it was the baby’s key worker that was always changing the baby then this will help then bond to become stronger. Nappy changing can also be very enjoyable and stimulating for the baby and this will also result in helping to develop on the baby’s language development further. Another example pf how an event of a well planned care routine can also help to enhance the overall development of a baby is meal times.As well as meeting the baby’s individual care need an d helping the baby to understand routine it is also helping the baby to develop in other areas of development such as language development and can also help the children to form bonds with social and emotional attachments. At meal times in my current baby placement all the baby’s sit around the table together and all are eating or fed at the same time. Meal times are made fun with the practitioners communicating with the baby’s either through song or talking.By doing this the practitioners are helping the baby’s to become familiar with words which will help them to develop on their language development and they are also helping the baby’s to form bonds with the members of staff in the setting. As a result of this the children are going to be stimulated and experience enjoyment which will help when carrying out future meals times. Therefore as a result of this the baby’s will begin to enjoy nappy changes and meal times and the practitioner will be a ble to use these events of the care routine as times when the child can also be learning and developing.C: Discuss the importance of an environment that is safe, reassuring and stimulating. A development of E2. Consider why babies need a safe, reassuring and stimulating environment. This may include: the rights of the child and parents, encourages exploration, mental, emotional and physical benefits etc. Having a safe, reassuring and stimulating environment for babies that are attending the setting is essential in helping the baby to feel safe, secure and settled. The environment that a baby is developing in affects the way they grow and develop.As a result this environment will allow the baby to grow and develop their skills. Babies need plenty of opportunities to explore and move but they also need to be talked to and played with. Babies that have no or little stimulation will not or will slowly develop show signs of development. They will lack development in areas such as languag e and cognitive development. Offering babies lots of stimulation also encourages the children and helps them to develop on certain skills. By giving babies a safe, reassuring and stimulating environment then the practitioner is respecting the rights of the child.Every child has the right to be safe, feel reassured and have stimulation. To create this type of environment the practitioner has to enforce and used certain policies and procedures. An example of one of these policies is the child protection policy and a procedure that comes under this policy is that all staff has to be crb checked before entering the setting. As a result of this no one with a criminal conviction can enter the setting and it ensures that no one of any danger can work with the babies. Reference could be made to appropriate curriculum frameworks.B: Evaluate the role of the practitioner in promoting an inclusive approach when working with babies and their families 8 980 496 510 515 A practitioner should alway s have and promote an inclusive approach when working with babies. The practitioner should ensure that all babies are included and are care for with their individual needs being met at all times. As all the babies are different then within the setting there is going to many diverse needs that need to be met and the babies also have different family background and cultures that need to be considered in order for the practitioner to be inclusive.One role of the practitioner in promoting an inclusive approach is to put systems in place that can help to meet the children’s individual needs such as if one baby in the setting is allergic to peanuts then the practitioner will put a system in place so that the particular child is not going to come into any contact with nuts. An example of this would be that the baby’s feed or food would be kept in a separate place to the other baby’s food or snack so that the food is not coming in contact with any peanuts. A positive at titude in the setting is another way that the practitioner can promote an inclusive approach.If all the practitioners in the setting have a positive attitude towards the setting, children, parents and each other then it will help everyone to feel welcomed and included in the setting. Respecting the baby’s family’s beliefs and wishes is a way that the practitioner can demonstrate that they are promoting an inclusive approach. If the baby’s parents request that the baby cannot participate in a certain task or if they insist that the baby must do or receive something at a certain time then the practitioner must carry this out to the correct procedure that the family have requested in order to show respect for the families’ wishes.The settings environment must be welcoming and diverse to ensure that everybody feels comfortable, safe and secure whilst using it. An example of this would be the displays and facilities in the setting. The displays in the setting must show a diverse range of information and pictures by doing this the setting is sending a message out to them that visit that they are diverse and that they do embrace individuality. Working with parents to achieve the best for the baby is helps to make the setting welcoming.If the parents are made to feel that they can come into the setting any time and approach the practitioner with any issues then this will help the parent to feel that they are welcomed into the setting. Also keeping the parents involved with decision making is a way that the practitioner can make the setting welcoming by doing this the practitioner is making the parent feel valued and that there opinion matters. A detailed consideration of how the practitioner ensures the setting welcomes and provides for all babies and their families.Evaluation may include: systems in place to support individual needs, the environment reflects those that use it, positive attitudes, value diversity and respect beliefs/ values , staff and parents involved in decision making, writing and reviewing of policies, partnership with parents, reflective practice, challenging poor practice†¦Ã¢â‚¬ ¦. A: Reflect on the influences of theoretical perspectives of development and attachment on current practice in settings working with babies under 1 year of age. A detailed consideration of theories relating to development and to attachment.Make links to show how these have influenced current practice in settings that care for babies. This could include: Current research/theory into the effects of day care on babies, quality care standards, national initiatives, Curriculum frameworks, provision, key workers †¦ Bowlby’s attachment theory is a theory that influences current practice in settings working with babies under 1 year of age. ‘John Bowlby was one of the first people to recognise the need of babies and young children for a strong stable relationship with their primary carers. Bowlby believed that mental health and behavioural problems could be linked back to a child’s early childhood. ‘Bowlby’s evolutionary theory of attachment suggests that children come into the world biologically pre-programmed to form attachments with others, because this will help them to survive. ’ Bowlby believe that attachment behaviours are natural and will be activated by any situation that is seen to be a threat to the achievement of closeness to the adult, such as fear, insecurity and separation. ‘Attachment is an instinct in babies.They must form an attachment by the time they are 12 months old as otherwise they may find it hard to develop strong relationships in the future. ’ Bowlby’s theory influences settings now to have the key worker system in place. The key worker system allows the baby to form an attachment with their key worker as the key worker will be the one that is providing the baby with are the basic essentials to be able to survi ve therefore the child will form an attachment with the practitioner as they are the child’s only form of comfort and survival.The key worker will also be providing the baby with a routine that is the same to the one that they are following at home therefore this will also help the attachment to form as the child will feel the similarities between the key worker and home. A current theorist that influences on current practice and on the way practitioners meet the learning needs of babies is Lev Vygotsky. He believed that children are active in their learning and thinking. He also believed that children’s social environment and experiences are very important.Vygotsky influences the practitioners to provide the right resources for the baby to be active in their own learning. For example providing the baby with rattles, when the baby is provided with and shown the rattle then they will reach out for the object by doing this the practitioner is enabling the child to build upon their physical skills and also be active in their learning. Vygotsky, Piaget, developmental 284 70 Bowlby, attachment 80 82 576 Task 1: E1 Task 2: E2+C Task 3: E3 + E4 Task 4: E5 Task 5: E6 Task 6: E7, D, B Task 7: ABibliography http://www. needingworthcommunitypreschool. org. uk/introduction/keyworker. htm ——————————————– [ 1 ]. http://www. guardian. co. uk/science/2007/may/31/childrensservices. medicineandhealth [ 2 ]. http://www. ivillage. com/what-if-cord-wrapped-around-babys-neck/6-n-145567 [ 3 ]. http://www. nhs. uk/Conditions/Postnataldepression/Pages/Introduction. aspx [ 4 ]. http://www. secasa. com. au/index. php/family/11/95/5 [ 5 ]. Thornes N, Childcare and education, 2008, Cheltenham,Page62 [ 6 ]. ttp://www. nspcc. org. uk/Inform/cpsu/helpandadvice/organisations/childprotection/ChildProtectionPolicy_wda60690. html#Introduction [ 7 ]. http://www. nspcc. org. uk/In form/cpsu/helpandadvice/organisations/childprotection/ChildProtectionPolicy_wda60690. html#Introduction [ 8 ]. http://www. childwelfare. gov/pubs/factsheets/signs. cfm [ 9 ]. http://www. needingworthcommunitypreschool. org. uk/introduction/keyworker. htm [ 10 ]. Page 80 [ 11 ]. http://www. simplypsychology. org/bowlby. html [ 12 ]. Page 80

The First World War The Great War - 1600 Words

The First World War sometimes referred to as the European War was more commonly referred to as the Great War. So much in the world was changed by this war, so it simply by most known as the Great War. â€Å"It is because no other war until then had had such an impact on the world. It was the first war to affect all of the major nations of Europe and the world. It took many lives and changed the lives of millions more.† (Rivera, 2014) Some countries do not refer to the war as great because they lost so much and for them there was nothing great about the war. The war was groundbreaking as nothing like it had happened before. Different countries were uniting, fighting, and making new rules as they went along. Everything during the war was on a large scale including death, weapons, people, and affects. Before World War I, airplanes had been used for exploring and transportation. During this war they were being used for dropping bombs and delivering chemical weapons such as mustard gas. The war affected future generations of people as over 40,000,000 casualties and over 20 million civilians died. By losing sons or husbands, families would be forced to move and learn a new way of life as the money makers were not around anymore. For those soldiers that watched their friends die right next to them, they would never be the same. So those that used to work in businesses with loud noises or banging machines, might be affected with flashbacks to the war as well. Man hadShow MoreRelatedThe World War II : The First Great War On Our Time917 Words   |  4 Pages Introduction- World War 1 was the first Great War on our time. World War 1 started on the 28th of July 1914 and ended on the 11th of November, 1918. This means that this war lasted for over four years. Over 1500 days of these soldiers’ lives, they spend fighting. There were over 18 million people who were killed or injured during World War One. Countries involved in WW1 are listed as when they first declared war. 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Credit Risk Management in Banking - Free Essay Example

Sample details Pages: 18 Words: 5533 Downloads: 7 Date added: 2017/06/26 Category Management Essay Type Analytical essay Did you like this example? This chapter demonstrates the literature that is relevant to the research on Credit Risk Management in Banking. The author has enclosed literature on dynamics, models, model features, and Basel II regulatory process for credit risk. The author has also enveloped literature on credit risk management in banks. Don’t waste time! Our writers will create an original "Credit Risk Management in Banking" essay for you Create order The author has also exhibited the literature on currently available approaches in calculating and managing the credit risk and its fit of with current banks in India. This chapter mainly focuses on the module and element available in credit risk with its fit with Indian banking sector. Many innovations have been brought in the financial services, in this the credit risk had been given the major importance to stop them from the failures and have a common goal: enhancing the risk-return profile of the bank portfolio. (Bessis 2002; Greuning and Bratanovic 2000) This chapter will form the basis for the arguments presented in preceding chapters. In the world of rising competition and turbulent business environment, it has become essential to identify measure and manage the credit risk to improve economical capital over the period of time .To enhance the credit risk new strategies been evaluated (Lore and Borodovsky 2000). Over the period of decade there is a tremendous change in banking to manage the economic capital and more than 80 percent of banks balance sheet generally relates to aspect of risk management. It involves complete assessment of the banks in different aspects such as supervise, control, enforce and recover loan, advances, guarantees and other credit derivates and the overall assessment includes the banks credit risk management policies and practices of the bank and in vice versa it makes banks to identify, measure and manage credit risk according to the changes in global capital market. (Greuning and Bratanovic 2000; Bessis 2002). 2.1 Definition of Credit Risk Credit Risk has been defined by many authors writing on this topic. Some of the definitions are as follows. The risk of loss due to failure by counterparty to perform on a contractual obligation (Banks 2002) The risk of changes in value associated with unexpected changes in credit quality (Duffie and Singleton 2003). The risk that a borrower will be unable to repay (Coult 1990). This is the risk that a counterpart defaults and the bank losses all its market position or that part which is irrecoverable (Andrew 2002). Credit risk is the risk of loss due to a non-payment of a loan or credit. It can be either the principal amount or interest amount. It exists when payment is being expected from someone he fails to pay. Lending financial institution creates substantial provisions or write offs ( Brain 2000 ) The risk that counterparty will not settle an obligation for full value, either when due or at any time thereafter, in exchange for value systems, the risk is generally defined to include replacement risk and principal risk (Gallati 2003). Credit risk can be defined as the economic loss suffered due to the default of a borrower or counterparty (Lam 2003). Credit risk is commonly thought of as the probability of default (Barnhill et .al., 1999). The possible loss (probability of default) that could occur for the ROP if the counterparties fail to meet their financial responsibilities, not only at the present time but also in the future (during the maturity of all outstanding transactions that result in credit risk). Settlement risk is explicitly excluded from the definition of credit risk (Blommertein 2005). 2.2 Credit Risk: It is the risk which is associated third parties money borrowed and he is not able to pay. In first the organization determines the interest rate for the loan and the guarantee amount required to secure the loan to check the credit worthiness (Andrew 2002) Credit risk includes risks connected with upgrading or downgrading borrowers credit worthiness. (Tapiero 2004) financial risks such as market risk, operational risk and credit risk decides the probabilities of future returns, extreme events and unknown defaults within an organization. Proposing credit risk combined with information leap decision theory, helps financial sectors balance regulatory requirements and revenue targets through loan and interest rates for secure credit risk group. (Web1).The external risks that are inaccessible from organizations control but affected by its financial operations are the financial risk, which includes Credit risk Liquidity risk Currency risk Cash-flow risk(CIMA ) 2.2.1 TYPES OF CREDIT RISK: Different authors had given different approach regarding credit risk types: Pre-settlement risk is a loss in advance before terminating a contract due to counterpartys default; this loss mainly depends on the alternate value of the contract at the time of default. Settlement risk- is the loss realized, when the payments are not received according to the contract on the settlement date.( Aziz and Charupat2000) Personal or consumer risk Corporate or company risk Sovereign or country risk (Greuning and Bratanovic 2000; 126) Credit default risk Credit spread risk (choudhry 2004; 2) 2.2.2 Five Main Factors Contributing the Level of Losses with Credit Risk Models: Changes in loss rate given defaults. Ratings migration. Correlation among default and rating transaction. Changes in credit spread. Changes in exposure levels. (Gallati 2003, 136). 2.3 CREDIT RISK POLICY: According to (Coyle 2000) policy should be realistic and manageable and there several different ways to formulate the policies depends on the management. Credit risk policy of every bank have to determine: how much credit to be provided; for what time duration; types of clients and so on, the bank policy should also specify the degree of diversity in size and the concern is apparently in profitability and the risk of loan. Credit rating desired by banks should have tolerance for risk associated with their economic capital. In this case, credit risk can be diversified and other risks can be priced high. Management must indicate the tolerance level to its credit risk and bind the loan losses (in terms of probability). Authorities should set approval on the credit sizes and the risk exposure. Credit risk should be tracked and the exposure level reported systematically combined with information about creditors in it and (Crouhy Et al 2006) often the policy are insufficient or same type o f other product makes the profit maximization (Mostafa 2000) policy should be employee knowledgeable and capable persons to control and manage risks, and reviewing reports from management to certify the adequacy of risk profile and controls. (Website 7) 2.3.1The Most Commonly Used Management Tools Include The commonly used tools by the management in setting up the policy are: Pricing of loan transactions based on the risks involved in it. Individual loans or portfolios are to setup with risk limits. Applying as a tool for managing credit risk credit insurance, derivatives and guarantees Securitization of risks. Buying and selling of assets.(FMA Report 2005) 2.4 Dynamics of Credit Risk Variety of aspects factors in banks credit risk business; identifying and better understanding and gives a good opportunity in lending activities and maximise the return on the risk which banks has taken (Kudyba 2004)The importance measuring and identifying of credit risk makes both the possibility of default and loss incurred. According (Duffie and Singleton 2003; Culp 2001; Banks 2002; Kudyba 2004) they had given three dynamics influencing the credit risk are. 2.4.1 Identifying Credit Risk: Different authors have different approaches in identifying the credit risk process, it provides with strong base for the better risk management process. The identifying activity determines the business at each for its capability (Glantz 2003) and impact of the current decision on the business (Basu and Rolfes 1995)the business at the individual level they are taken in the account but later it may be aggregated for the better management of risk, not only the current risk are identified r but also the emerging risk are taken into account and even those which doesnt have impact with the business but it may have in the future and identifying, could provide with better constraint for the future in business in regards to credit risk (web 1). the credit risks at each level is studied and then a cumulative risk statement for the organization as a whole is formed, during this process the present risks as well as possible risks in the near future should be marked with the help of valid knowled ge from risk officers, the credit risk identification process must proceed in a logical succession: beginning with the most common or essential and moving to the more complex or esoteric. Thus, the identification of risk must be broad and stand as basis for quantification and limit-setting phases. (Banks 2002; Bitner and Goddard 1992; Kudbya 2004). Illustration: Credit risks: Fundamental Unsecured loan / loan-equivalent default risk. Derivative-equivalent default risk. Marketable securities. Deposit default risk. Settlement / delivery risk. Sovereign default risk. Convertibility risk. Collateral default risk. Liquidity risk. (Banks 2002) Esoteric Cash flow mistakes risk (creating unsecured loan). Contingent cash-flow risk (triggered by events). Credit cliff risk (triggered by rating events). Model risk (in credit analysis, pricing and valuation).(Banks 2002) 2.4.2Measuring credit risk: According to (Duffie and Singleton 2003) the measurement of credit risk presents some challenges in measuring, but credit risk is considered as a component of market risk. The measurement process requires a blend of theory and art (Figlewski and Levich 2002) thus measuring of credit risk is being done in different ways (anonyms). Specialized measures of credit risk The involvement of credit risk to market risk is difficult in providing the benefits to the counterparty from credit risk and limiting the interest towards credit risk by industry, geographic region and so on. Several complementary measures of credit risk have been exposed for the better understanding of credit risk and risk managers explored such measures (Duffie and Singleton 2003). B) Market value of default loss: Determining the Value of Debt and Market value of default loss are the same (Burner 2004). An approximate calculation of the influence of credit risk on market values helps to figure out the expenses and profits of marketing and in determining the strength of financial firms resources supporting credit risk. Determining of value of debt is same as (Duffie and Singleton 2003; Glantz 2003). C) Exposure: Accurate measure of exposure quantifies future measures (Schwartz and smith 1997) In case, new plans that attract customers attitude is introduced by a counterpart, the exposure measure is used by an organization to limit strategies and reward credits, exposure might be fruitless when the counterparty conceals essential information. (Duffie and Singleton 2003; Servigny and Renault 2004). 2.4.2.1 USES OF CREDIT RISK MEASUREMENT: Active portfolio management. Setting of concentration and exposure limits. Setting of hard targets on syndicated loans. Risk bearing pricing. Improving the risk return profiles of the portfolio, Evaluation of risk-adjusted performance of business lines of managers using risk-adjusted return on capital. Economic capital allocation. Setting or validating loan loss reserves either for direct calculation or for validation process.(Website 3) According to (Fma Report) though there is no standard protocol for measuring credit risk, a regular evaluation of credit risk is a must for a perfect financial management. The actual loan losses distributed are asymmetric so there could be small chances of big losses and big chances of small losses (Glantz 2003) Credit risk is calculated from possible losses in credit portfolio, the possible losses can divide into Expected loss. Unexpected loss. 2.4.3 Expected loss: The loss which is expected from the borrowers default probability and the exposure at default less the recovery data, i.e., all expected cash flows, especially from the realization of collateral. Under certain credit conditions all the expected losses should be accounted for income planning and included as standard risk costs. (FMA Report; Figlewski and Levich 2002 2.4.4 Unexpected loss: The unexpected loss arises from the expected losses. They are taken into account indirectly via equity costs for income planning and setting up credit conditions. Risk coverage capital is used to secure the unexpected loss to compensate the expected looses. (FMA Report; Figlewski and Levich 2002) 2.4.5Expected loss vs. unexpected loss: The expected loss and unexpected loss cannot be minimized through diversification. The yield from loan can be made profitable by covering directly the expected loss (it should be included related funding and operating costs) and by covering the unexpected loss indirectly (making profits from banks difficulty rate on the assigned capital cushion ). Exact measurements of Expected loss and unexpected losses are decisive for profitability measurement. Comparing pricing, resource allocation, or portfolio management is critical to find out the profitability and it is helpful only when there is constant measurement of expected loss and unexpected losses. The connection among Unexpected Loss and Concentration Risk, Correlation and Portfolio measures the uncertainty or variability of loss. The possible levels of unexpected losses in a portfolio of credit exposures are essential to the successful management of credit risk. Expected loss is subtracted from loss at the confidence interval usuall y done by all the banks. Credit pricing is used for recovering the expected loss. Therefore, capital is needed only to cover Unexpected Losses (loss estimated at the confidence interval minus EL). (Glantz 2003; Saunders and Allen 2002;Saita 2007; Website 3) figure 2. Explains correlation against the expected loss and unexpected loss. (Adapted from website 3) 2.5 Calculation of Credit Risks: For measuring the unexpected losses the two main methods used today: Value At Risk Analysis or Scenario Techniques The accuracy level and methods of calculation are totally different in both the methods .scenario techniques are the easy methods and used where the VaR IS not possible. 2.5.1Value at Risk (VAR) ANALYSIS: According to (Fma report) Value at Risk:the maximum loss will not exceed a certain probability at a given horizon is used to measure, manage, assess and control in investment management (jorion 2004) While determining the value at risk, the confidence level exposes the probability of maximum losses which will not exceed the holding period and analysis can be done on the available historical data (Pilipovic 1998). VaR estimates the current value of portfolio and probability of changes in the future portfolio. (Marrison 2002) The level of accuracy is usually measured between 95% and 99.95%, which shows the highest loss possibility between 5% and 0.05%. In holding period, loss occurs due to liquidity of assets. Value at Risk analysis has the advantage of calculating risks with different portfolios and with different types of risks such as credit risk, market risk and operational risk. (Pearson 2003; Saunders and Allen 2002; Saita 2007) 2.5.1.1Computation of Value at Risk: To calculate value at risk, for single assets is a bit uncomplicated (Caouette et al 1998) it is necessary to conclude the allocation of potential losses in credit portfolio. Assumptions are made at default rate and they developed for the future exposure default. Value fluctuations in the extreme market movement are calculated by using stress tests but insufficient historical data can restrict the calculation of credit risk. (Fallon 1996; Fma Report; Pearson 2003) 2.5.2 SCENARIO ANALYSIS: Scenario analysis put up a multiple factors such as conceptual (verbal), relational (models) and numerical (data) can be organized in a logical manner (Website 9). The existing historical market data and/or internal bank data generates a scenario relating to the development for the default rate. It is mostly used in potential future losses and external losses (Rosengren 2006). In the Normal case scenarios, the developed loss is unspecified with certain historical period. In Worst case scenarios, occurrences of excessive losses are unspecified. It is used in determining the area of fluctuation in portfolio values. Higher feasible risks are calculated on the basis of scenario analysis. This techniques has a limited explanatory power will make only a few changes in parameters. The quality of result will be lower when compared to value at risk concept. From the given historical data and limited parameters, value at risk concept cannot be achieved. Banks using the results from scenario an alysis have to accept less precise results than using value at risk concept. The additional cost or profit and additional benefit could be derived by implementing this method. (FMA report; website 10) 2.6 BANK FOR INTERNATIONAL SETTLEMENTS (BIS): The Bank for International Settlements (BIS) was established on 17th may 1930, is the worlds oldest international financial organization and it acts as central banks for all the banks. It fosters international monetary and financial cooperation for all central banks. The head office is in Basel, Switzerland. The BIS customers are central banks and international organizations and it doesnt anticipate any deposits or provide any financial services to private individuals or corporate entities and it strongly advises caution against fraudulent schemes. The BIS currently employs 557 staff from 48 countries. The Basel Based Committees supports in researching the economic, monetary, financial and legal activities. It shares the statistical information among the central banks, and it publishing statistics on global banking, securities, and foreign exchange and derivatives markets. The role of the BIS is dynamic to the global financial society and is also an emergency funder to nations in tro uble; it aided the countries such as Mexico and Brazil during their debt crises in 1982 and 1998. It does race directly with other private financial institutions for global banking activities. BIS struggle to offer quality services in order to attract central banks as their clients to provide security; it also maintains abundant equity capital and reserves that are diversely invested following risk analysis. It works With International Monetary Fund (IMF) of all central banks .it cooperate in organizing and reviewing the technical assistance for all central banks. (Zulu et al., 1994 And Baker 2002) The BIS fulfils this mandate by acting as: a forum to promote discussion and policy analysis among central banks and within the international financial community a centre for economic and monetary research a prime counterparty for central banks in their financial transactions Agent or trustee in connection with international financial operations. https://www.bis.org/about/index.htm https://www.investopedia.com/articles/03/120903.asp 2.6.1Basel II Main motto for implication of Basel II was to escape from one-size fits all from Basel I (Santos 2000) According to (Greuning and Bratanovic 2003) List of options for measuring credit, market and operational risk. The approaches set by Basel II balance themselves in terms of simplicity and accuracy. Basel committee considers three types of approaches to deal with credit risk are Internal ratings-based approaches Full modes approach Pre commitment approach(Servigny and Renault 2004, 393) 2.6.2Three Pillars of Basel II: Basel committee has developed three comprehensive pillars for sound capital regulation framework. The implementation of all the three pillars in a place makes adequate level of soundness. (Akkizidis and Vivianne 2006) 2.6.2.1Pillar 1 Minimum capital requirement: the main aim is to determine the capital required for portfolio in banks given the level of credit risk. (Williams 2007) 2.6.2.2Pillar 2 Supervisory review: it gives the supervisory approaches to the banks for their capital management .The aim here for the banks is to follow rigorous procedure in measuring the risk exposure and to have enough capital to cover their risk involved in it .Banks usually consider an internal process to demonstrate their risk profile, operations and strategy to enable the supervisors to intervene the banks capital. An approach for the identification and understanding of various situations such as the falling capital level can raise questions on the ability of a bank to withstand business shares. (Williams 2007) 2.6.2.3 Pillar 3 Market discipline: the new requirement has been introduced to reveal the risk information of equity and capital markets, so that the investor gets a better practised discipline regarding the bank behaviour. A cautioner notice can be available for the investor to find out the level of risk involved in it. (Servigny and Renault 2004, Crouhy Et al., 2006).In order to do business in a safe, sound and effective manner risk assessment mechanism is important. A perfect risk assessment makes a participant effective, reliable and timely in the market place. It gives transparency and disclosure in the capital adequacy issue. Figure 3 shows the picture of pillars formed by Basel II accord. (Williams 2007) Calculation of credit risk in capital adequacy requirement includes a standardized approach and two versions of an Internal rating based model. Figure 3 Adapated from (Akkizidis and Bouchereau 2006) 2.6.3CURRENT CREDIT RISK REGULATIONS: (1988) BIS guidelines have set regulations for current credit risk which includes the minimum capital adequacy for credit risk, the definitions for the countable equity capital and strengthening the capital standards in large banks. The calculation approach was switched by BIS guidelines and set as indirect capital requirement method or minimum capital requirement. At first, Instance Balance sheets positions are weighted in accordance to the counterparty risk and later 8% of standard capital requirement is multiplied and to be maintained for all the credit portfolio issued by the banks. (Williams 2007; Saunders and Allen 2002). Opportunities created in Regulatory Capital Arbitrage increases the risk based capital ratio through securitization and financial innovations, and many banks have lowered risk based capital considerably without decreasing the overall credit exposure. Therefore the stability is being created in the periods of disaster and insecurity. September 1997 Amendment in Basel Accord has given additional arbitrage opportunities in lower-risk based capital requirements. Grounding risk management and measuring with the available traditional data and formal quantitative techniques. (Fig. 3.1) (Effros 1998; Saunders and Allen 2002; Williams 2007). 2.6.1 Methods for Calculating Regulatory Credit Risk: There are number of approaches for calculating regulatory credit risk are: Standardised Approach: Risk weight of each firms assets are allocated in producing the sum of risk weighted assets value external credit assessment are used in determining the counterparty risk weight (FSA 2006) Simplified Standard Approach: Credit risk for small and limited licence firms which has incidental credit risk exposure .This might prove costly for the firms to calculate the regulatory capital calculations. In this case the firms are required to weight risk on whole exposures. If it is not possible the firms can use single risk weight to all exposures classes which might be unduly costly. (FSA 2006) Internal Rating Based (IRB) Approach: Here the internal assessment is established for the credit risk in their portfolios. The risk weighted in this approach will be more diverse than the standard approach. This approach risk sensitive. (FSA 2006) 2.6.2 DEFICIENCIES IN THE CURRENT REGULATIONS: Counterparties are not differentiated in depth with the risk weighting factors and thus the risk is not represented in satisfactory and in perspective form. Correlation within the credit portfolio is not measured. The hedging of credit risk is not judged with the credit derivatives, net economical output has been supported with the capital to judge the credit risk. (Erisk 2005; Alexander et al. 2005). 2.6.3 Factors Challenging existing Regulations in Credit Risk Management: The following factors challenge credit risk management are .Transactions and portfolio approaches are not differentiated in current practice. There are various contracts in commercial loans which are often complicated with our structural elements. Measuring risk adjusted profitability is difficult to accept due to lack of understanding in operating economic capital cost: limited loan trading makes it hard to compare the value between loans and other traded asset classes (Gallati 2003). 2.7APPROACHES AND OPTIONS OF BASEL II: Basel II regulatory has two alternative approaches for calculating the credit risk for their capital requirements they are Standardized approach and Internal Rating Based (IRB) approach. In standardized approach, credit risk is measured on the basis of External Credit Assessment Institutions (ECAI s). In IRB approach, banks use their own internal rating system to measure the determinants of credit risk and supervisory approval according to different versions- Under the foundation version, the Probability of Default (PD) is calculated on the basis of their own ratings, for the other determinants they rely on supervisors under the advanced version, and they have their own measures for all other determinants such as Loss Given Default (LGD) and Exposure At Default (EAD). (WEB 4) 2.7.1 MODELS OF CREDIT RISK: A majority of mathematical researches has been dedicated to credit risk for modelling the default event occurrence. (Bielecki and Rutkowski 2002) The main objective of these models is to support in pricing and hedging of financial contracts that are sensitive to credit risk. The pricing of credit risk is done in order to produce internal consistency in financial model. The two challenging methodologies emerged to model the default/migration times and the recovery rate, are structural approach and reduced-form approach. (Web 5) STRUCTURAL MODEL: The main concern in structural models is regarded with the modelling and pricing of credit risk that are specific to corporate obligation (a firm). The major framework of structural model is the evolution of firms value and the firms capital structure; hence it is also referred to as firm value approach. Value of firm structures the firms economical fundamentals. Structural framework has an alternate approach in postulating the bankruptcy decision and these results in specifying capital structure and strategic debt service. (Bielecki and Rutkowski 2002) REDUCED-FORM MODEL: The value of firms assets and capital structure are not modelled in reduced-form model. It is only concerned with the modelling of default time and hence referred to as Intensity-based model, and with migration between credit rating classes are called as credit migration models .(Bielecki and Rutkowski 2002) INTESITY-BASED APPROACH: Random time of default is modeled under this approach and with that evaluation of risk natural probability with default time and cash flows, Random time of default can be defined jump time. Conditional expectation plays an important role in evaluating the default intensity process (saunders 1999; Bielecki and Rutkowski 2002) CREDIT MIGRATION: It characterizes the expected changes in credit quality of obligor. The basic objective is asset pricing and risk management. The quality of credit migrates for each credit classes.( Bielecki and Rutkowski 2002; Ramaswamy 2003) DEFAULTABLE TERM STRUCTURE: Interest rates are modeled under this approach, but there is no much difference with default-free term structure. Interest rates are modelled for overall credit rating classes under default able term structure. (Bielecki and Rutkowski 2002; Schmid 2004) 2.7.2CRITICAL FACTORS IN CREDIT RISK MODELINGS: Probability density functions of credit loss. Expected and unexpected credit loss. Time horizon. Default mode. Conditional versus unconditional models. Approaches to credit risk aggregation. Correlation between credit events. (Gallati 2003, 136) 2.7.3 Developing Approaches in Credit Risk Management: The new generation with new technologies has emerged in engineering the credit risk topic. Eight most obvious reasons for this rapid rush in interest are, Maturity market risk area: The knowledge attained over the past decades on the basis of theoretical and academic research and also practical experiences has helped in realizing the importance of market risk modelling and in welcoming all new challenges on credit risk and operational risk. (Gallati 2003) Disintermediation of borrowers: As the expanded capital market is a boon and has given accessibility to small and middle-market firms. The borrowers who are left behind from raising funds from the banks and financial institutions are smaller and have weaker credit ratings. A rapid growth in capital market has lead to winners curse and it resulted in credit portfolio structure of financial institutions. (Gallati 2003) Competitive margin structure: Despite the average quality, loans have turned down in respect to the margin spread, (due to disintermediation), whole sale loan markets has gone very thin, lending has gone worse in risk premium and tradeoffs. The important factor is that, it has improved competition for low quality borrowers (finance companies). It concentrates on higher risk rather than low quality at the end of the market. (Gallati 2003) Structural changes in bankruptcies: Considering the economic downsides in bankruptcy statistics, it has showed a considerable increase in bankruptcies due to global competition and sectoral changes worldwide. Technology and credit risk analysis plays a vital role now than the past and promisingly the most important part. (Gallati 2003) Diminishing and volatile values of collaterals: The real estate value and asset value are hard to predict and are realized through liquidation process because of banking crisis has developed in different countries. In case of weaker rating, the collateral values risks lending. (Gallati 2003) Exposure from Off-Balance-Sheet derivative: Counterparty risk and credit exposure has grown on the basis of derivative market and it has extended the need for credit analysis in loan book. The leading banks have created imaginary value for the off-balance-sheet exposure using Over-The-Counter (OTC) swaps and forwards which exceeds 10 times more than their portfolio. The off-balance-sheet credit risk was one of the reasons to introduce the risk based capital requirement in1993. (Gallati 2003) Capital requirement: In BIS systems, a minimum capital requirement was held on the basis of marked-to market current value of OTC derivatives contract added with the potential future exposure. (Gallati 2003) Technological advancement: Information technology has played a vital role in developing the historical information databases which has provided the banks to test the high powered modeling techniques. Modern Portfolio Theorys (MPT) models and techniques have helped to analyze loan loss and value distribution in management of their portfolios. (Gallati 2003) 2.8Credit risk in banks: In rising market, banks have a poor conception of bank credit risk. (Global Credit Research 1999) Banking works as a part of an internal system in which credit circulated around various economic sectors. Banks and financial institutions must regularly balance risks and rewards. Dramatic increase in the price of interest rate on loan products, lose the customer; too low the prices of loan a product makes starve the profit margin or take a loss. More liquidity of cash in reserve makes miss investment, less liquidity makes risk regulatory refusal and financial instability in the market to stand. It is be difficult for the banks to measure overall risk exposure and strike the right balance. Senior management decides the credit scoring proportion for loan based on the customer or a client. Every bank has individual sub units for the credit risk, approval and sanctioning. Credit risk policy differs from banks to banks in the credit risk management is set by the top management of banks. Ban ks have a variety of options in credit risk models, for identifying, measuring and managing the risk. (Jorion 2003; Coult 1990; Gup 1999) Credit risk issues in the banks can be through consumer ,mortgage lending, bad debts, corporate consumers ,industry risk, settlement and delivery risk .(chartered institute of bankers 1988) The rapid evolution of credit risk management techniques speeds the advance of a response in the events in the banking and financial sector. Rising technological developments have played a supporting role in facilitating the adoption of most accurate credit risk management techniques. Even though advance in study and analysis in relation to credit risk, implementation of some new approaches has a long way to play for the large number of banks. Better measurement and management of credit risk in banks is likely to carry implications to develop in the future and it is reflected from the different activities of the banks. Certainly, as banks improve their ability to assess risk and return associated with their various activities internal subsidies will become more transparent. (Reserve Bank of Austra lia Bulletin 1997; Coult 1990; Gup 1999) The figure portrays the risk appetite in Indian banking and the major parts of risk in banks are credit risk as it holds the major part of risk in the banks and major part of concentration is given to the credit risk as shown in the figure 1. Fig 3. Risk appetite https://212.59.24.64/Kredito%20rizika/Rizikos%20valdymo%20sistema/krvaldymas2.pdf 2008 2.9Summary: From the above discussions the researcher has understood that credit risk have been defined in several ways. True fact is different books and articles got different ways of approaches towards the same meaning. Credit risk is given critical importance in the banks as it plays the important role in banks and other financial institutions. Credit lending is one of the main objectives of the banks and other financial institution; it takes the major part of the business other than market and operational risk. All the rest functional activities are depending on it. Various approaches and practices are being followed for the risk management. Different types of credit risk has been given by the various authors depends on the business and perception of the business. The different models and approaches show level of losses involved in credit risk. All the banks and other financial institution have their own credit risk policy depends on their size and nature of their business and mostly the management uses the common approaches to come out of it. The first step of banks could be identifying, as it works as the strong data base for the banks and the measuring, is to know the value of the business and later the managing, to protect from the future outcomes of risk in the business. The possible losses can calculated from the expected and unexpected losses. Unexpected losses can be calculated with two approaches Value at Risk and scenario analysis. Value at Risk exposes the probability of maximum losses which enables to measure and manage the credit portfolio. The future portfolio exposure losses can be identified. Historical and available data are used to calculate the credit risk in Scenario analysis future and excessive losses can be identified. Basel ll formed by Banks for international settlements (BIS) set for the central banks to manage their risk under the three pillars. The banks regulatory capital calculated under various approaches. Few options and approaches are set up for calculating the credit risk by the Basel committee .structural and reduced form method to validate the default loss in the current portfolio exposure .the eight most developing approaches reckoned in the credit risk management for the banks and other financial institutions. Banks works as mutual between the depositor and lenders and its internal system in which credit is spread around various economic sectors. Modern banks have come with various techniques and software to make out the credit risk in their banking business. As credit risk is one of major problems for the banks in their banking business and new approaches gave the new modification for the banks to access, analysis and manage the credit risk in the banks.