DCI's approach is based on ideas with a long history

  • the benefits of broad-scale diversification
  • using the insights of option theory and information in markets (particularly equity markets) in the valuation of credit
  • the quantification of credit risk at both the individual asset level and the portfolio level
  • the implications of the range of credit risks and the dynamic nature of default probabilities on the management of credit risk
  • the importance of separating out the effects of credit from interest rates