Lesson 51 introduced the three IFRS 9 stages and showed the journal entries. This one zooms into the FORMULA underneath the ECL number. Every loan, every reporting day, runs: ECL = PD × LGD × EAD. PD (Probability of Default) is the chance the loan defaults in the relevant horizon. LGD (Loss Given Default) is the % of EAD you'd lose if it did. EAD (Exposure at Default) is the principal at risk. Stage 1 uses 12-month PD; Stage 2/3 use lifetime PD. The hard part is the MODELS, Stage 2 PD depends on macro variables (unemployment, GDP, FX) plus borrower-specific signals (DPD, credit score, sector). This lesson shows the entry that posts the resulting ECL delta but the real value is the formula.