Learning Objectives:

  • Apply risk-based pricing to commercial loans.

  • Conduct sensitivity analysis to assess repayment capacity.

  • Structure loans to mitigate identified risks.

7.1 Risk-Based Pricing

Risk-based pricing links loan pricing to the assessed credit risk. Campbell University and Western Colorado University courses both cover “risk-based pricing of commercial loans” . The SMU Academy programme emphasises understanding the “relationship between risk-based pricing and facility structuring” .

7.2 Sensitivity Analysis

The IBA programme covers “Sensitivity Analysis and Projecting the Ability to Repay” . Sensitivity analysis evaluates how changes in key assumptions (e.g., interest rates, sales volume, input costs) affect the borrower’s ability to service debt.

7.3 Structuring to Mitigate Risk

The IBA programme covers “Structuring the Loan and Loan Agreement to Mitigate Risk” and “Identifying Inherent Risk in Common Categories CRE & C&I Lending” . Effective loan structuring addresses identified risks through appropriate loan terms, pricing, and credit enhancements.

 

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