Answer
May 12, 2025 - 07:31 AM
TTC (Through-The-Cycle) and PIT (Point-In-Time) models are credit risk assessment approaches that differ primarily in their sensitivity to economic cycles. TTC models estimate risk by considering long-term average conditions, smoothing out short-term fluctuations, and focusing on a borrower's structural credit risk over the entire economic cycle. In contrast, PIT models are more sensitive to current economic conditions, reflecting the immediate credit risk and changes in the borrower's financial situation, which can lead to more volatile risk assessments.
