IFRS 9 Expected Credit Loss (ECL) Modelling

The introduction of IFRS 9 Financial Instruments represented a major change in the way financial institutions account for credit impairment. The standard was developed partly in response to concerns that the previous incurred-loss approach under IAS 39 could result in credit losses being recognized too late. IFRS 9 therefore introduced a more forward-looking Expected Credit Loss (ECL) model, requiring institutions to recognize credit-loss allowances based on expected future losses rather than waiting for an actual loss event.

Under the IFRS 9 impairment framework, financial assets are generally assessed using a three-stage model. Stage 1 involves 12-month ECL where credit risk has not increased significantly; Stage 2 involves lifetime ECL where there has been a significant increase in credit risk; and Stage 3 applies lifetime ECL to credit-impaired exposures.

In Nigeria, the Central Bank of Nigeria (CBN) issued guidance for banks and discount houses on IFRS 9 implementation. The guidance emphasizes robust credit-risk assessment, appropriate ECL methodologies, quality data, forward-looking information and model governance. It also identifies key modelling components such as Probability of Default (PD), Loss Given Default (LGD), Exposure at Default (EAD) and discounting.

As financial institutions increasingly rely on sophisticated credit-risk analytics, ECL modelling has become an important competency for professionals working in credit risk, finance, financial reporting, internal audit, risk management and regulatory compliance.

This course provides participants with a practical understanding of how to design, calculate, validate, document and govern IFRS 9 ECL models, including staging, PD/LGD/EAD modelling, forward-looking macroeconomic information, stress testing and model validation.

Course Objectives

At the end of this course, participants should be able to:

• Understand the principles and requirements of IFRS 9 relating to financial instruments impairment and expected credit losses.
• Explain the differences between the IAS 39 incurred-loss model and the IFRS 9 expected-credit-loss model.
• Understand and apply the three-stage ECL impairment framework.
• Determine when exposures should be classified into Stage 1, Stage 2 and Stage 3.
• Understand and assess Significant Increase in Credit Risk (SICR).
• Develop an understanding of the major components of ECL modelling, including:

• Probability of Default (PD)
• Loss Given Default (LGD)
• Exposure at Default (EAD)
• Effective Interest Rate/discounting.

• Develop appropriate approaches for 12-month and lifetime ECL calculations.
• Incorporate historical, current and forward-looking information into ECL estimation. IFRS guidance emphasizes the use of reasonable and supportable historical, current and forward-looking information.
• Understand how macroeconomic variables can influence credit-risk models and expected losses.
• Develop practical skills for ECL model development, implementation and monitoring.
• Understand appropriate approaches to model validation, back-testing and performance monitoring.
• Identify and manage model risk, data-quality risk and assumptions risk associated with ECL models.
• Understand the role of stress testing and scenario analysis in ECL estimation.
• Strengthen participants' ability to prepare and explain ECL calculations and management reports.
• Understand the governance, documentation and control requirements necessary to support an effective ECL framework.
• Enhance participants' ability to respond effectively to auditor, regulator and internal-review questions relating to ECL methodologies and assumptions.

Benefits of the Course

Participants will gain the following benefits:

1. Stronger IFRS 9 Compliance

Participants will develop a practical understanding of IFRS 9 impairment requirements and how they apply to credit exposures.

2. Improved Credit-Risk Measurement

The course will help participants better understand how credit risk can be quantified using PD, LGD and EAD, improving the quality of credit-risk assessment.

3. Better ECL Calculations

Participants will understand how to calculate and interpret 12-month and lifetime expected credit losses across different stages of credit deterioration.

4. Improved Loan Portfolio Management

Professionals will be better equipped to identify deterioration in loan portfolios and understand its potential impact on provisions and profitability.

5. Better Risk-Based Decision Making

Understanding ECL models enables management and risk teams to make more informed lending, provisioning and portfolio-management decisions.

6. Enhanced Data & Modelling Capability

Participants will understand the importance of data quality, historical loss information, credit-risk characteristics and macroeconomic variables in developing reliable ECL models.

7. Improved Model Validation

The course introduces participants to model validation, back-testing, sensitivity analysis and model-performance monitoring, which are important components of effective ECL governance.

8. Better Stress Testing

Participants will learn how stress scenarios and alternative economic assumptions can affect expected credit losses.

9. Stronger Audit & Regulatory Readiness

The course will help institutions improve their ability to document and defend their ECL methodologies, assumptions and judgements before auditors and regulators.

10. Improved Risk Governance

Participants will gain insight into the governance structures, policies, controls and documentation needed to maintain a robust ECL framework.

11. Enhanced Financial Reporting

A properly implemented ECL framework supports more timely recognition of credit losses and provides users of financial statements with more useful information about credit risk.

12. Practical Professional Skill Development

The course is particularly valuable because current ECL training increasingly combines IFRS 9 principles, data foundations, PD/LGD/EAD modelling, staging, SICR, model validation, governance, stress testing and practical case studies.

Who Should Attend?

This programme is recommended for professionals working in:

• Banking & Financial Services
• Chief Risk Officers
• Risk Managers
• Credit Risk Managers
• Credit Analysts
• Credit Officers
• Portfolio Managers
• Treasury & ALM Professionals
• Banking Operations Professionals
• Relationship Managers involved in credit
• Finance & Accounting
• Chief Financial Officers
• Financial Controllers
• Financial Reporting Managers
• Accountants
• IFRS Specialists
• Financial Analysts
• Management Accountants
• Auditors
• Risk & Compliance
• Enterprise Risk Managers
• Operational Risk Professionals
• Compliance Officers
• Risk Analysts
• Model Risk Managers
• Regulatory Reporting Officers
• Internal Control Officers
• Audit
• Internal Auditors
• External Auditors
• Audit Managers
• Credit Review Officers
• Inspection Officers
• Data & Quantitative Professionals
• Risk Modellers
• Data Scientists
• Quantitative Analysts
• Business Intelligence Analysts
• Statistical Analysts
• Credit Modelling Specialists
• Regulators & Supervisory Institutions
• Bank Supervisors
• Financial Regulators
• Regulatory Analysts
• Examination/Inspection Officers
• Policy and Risk Professionals
• Other Institutions
• The programme is also relevant to professionals in:
• Microfinance Banks
• Fintechs
• Development Finance Institutions
• Mortgage Banks
• Finance Companies
• Leasing Companies
• Insurance and other financial institutions with relevant credit exposures
• Large corporates with significant receivables or lending arrangements.

Course Booking

Please use the "Book Now" or "Inquire" buttons on this page to reserve your space or request for more information