Buffer Model Determination of Systemic Strategic Risks for Borrowers in Force Majeure Circumstances

Abstract

This study substantiates the concept of systemic strategic risks for borrowers and buffers systemic strategic risk in force majeure to the analyze the credit risk of banks. The authors studied the existing approaches used to assess the creditworthiness of borrowers and the credit risk of banks. The factors that influence the level of credit risk of borrowers are also identified. Quantitative and qualitative parameters of a borrower's creditworthiness, used in banking risk management, are also determined. An economic and mathematical model is proposed to determine the systemic strategic risk buffer for borrowers in force majeure circumstances. It is proposed that technology should be used to create a systemic strategic risk buffer for borrowers for hedging in force majeure circumstances as a monetary policy tool and include Basel III in the requirements of the banking agreement.