Advanced Credit Risk Management Strategy for Global Investment Firm

ABC Wealth Management is a global investment firm with a diverse client portfolio that includes high-net-worth individuals, institutions, and family offices. The firm offers a range of investment products, including mutual funds, fixed-income securities, and alternative investments. Recently, ABC Wealth Management has faced increased credit risk exposure due to their substantial investments in corporate bonds of companies in the retail and energy sectors, particularly during a period of economic uncertainty and rising interest rates.

In light of the increasing credit risk surrounding these sectors, clients are increasingly concerned about the potential for defaults and the overall impact on portfolio performance. The firm's Chief Risk Officer (CRO) has asked for a comprehensive risk management strategy to evaluate and mitigate credit risk associated with these investments.

In your response, outline a thorough credit risk management strategy for ABC Wealth Management. Your answer should include specific measures for assessing credit risk, methodologies for monitoring and managing this risk, as well as suggestions for communicating risk exposure to clients effectively. Additionally, address how changes in the macroeconomic environment could impact the credit risk profile of the firm’s portfolio.