SlideShare uma empresa Scribd logo
1 de 42
Baixar para ler offline
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
1
JOIN. ENGAGE. LEAD.
THE 8 STEPS OF
CREDIT RISK MANAGEMENT
Safeguard your lending program by learning
about the 8 steps of managing credit risk.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
2
JOIN. ENGAGE. LEAD.
MANAGING CREDIT RISK
Elements of
Credit Risk
Management
Know your
customer Analyze
nonfinancial
risks
Understand
the numbers
Structure the
deal
Price the deal
Present the
deal
Close the
deal
Monitor the
relationship
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
3
JOIN. ENGAGE. LEAD.
1 KNOW YOUR CUSTOMER
• Knowing your customer is the
foundation of the credit process.
• You must operate on pertinent,
accurate, and timely
information.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
4
JOIN. ENGAGE. LEAD.
KNOW YOUR CUSTOMER (CONT.)
• The information you gather and the relationships
you establish are critical to positioning yourself as
a valued financial consultant and provider of
financial products and services.
• Establishing a good relationship can bring a long
stream of equity to your institution.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
5
JOIN. ENGAGE. LEAD.
• Find out as much as you can about the
company and its industry prior to
meeting with the customer.
• This up-front exploration allows you to:
– Make the most of the time that you
have with the customer.
– Set up an effective calling plan to
guide you through the interview
process.
KNOW YOUR CUSTOMER:
PRE-CALL PLANNING
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
6
JOIN. ENGAGE. LEAD.
KNOW YOUR CUSTOMER:
THE INITIAL INTERVIEW
Elicit key information. Listen for verbal cues and
watch for non-verbal cues
to help establish a
customer’s needs.
Establish your credibility as
a knowledgeable
professional and friendly
businessperson.
Ask questions about the
company’s products and
services, customers,
suppliers, facilities,
management,
ownership, and history.
Develop your initial
observations about
management’s behavior.
Start to evaluate
management’s
qualifications and abilities
to carry out the company’s
business strategy.
Investigate competition,
market share, and the
probable impact of
economic conditions on
the business.
Identify the company’s
business strategy and what
the company must do to
succeed.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
7
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS
• Understand your customer’s
business by analyzing
nonfinancial risks.
– Information gathered in this step is
critical to positioning yourself as a
financial consultant to your
customer and a valued member of
your financial institution’s lending
team.
2
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
8
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS (CONT.)
An understanding of the economic and
industry factors that influence a
company’s financial stability and
financing requirements is necessary
before evaluating the numbers.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
9
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS (CONT.)
There is risk to every line item on the balance
sheet and income statement.
Learn how to evaluate those risks, which fall into
the broad categories of:
• Industry
• Business
• Management
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
10
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS:
MICRO AND MACRO LEVELS
• The concept of risk
management can apply to
a single loan or customer
relationship (micro) or to
an entire loan portfolio
(macro).
– At the micro level, a loan is a
risk.
– At the macro level, a
portfolio of loans is a risk.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
11
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS:
MICRO AND MACRO LEVELS (CONT.)
• Your credit policy department
will identify risk factors and
query the entire loan portfolio
(macro) to judge whether the
particular risk is relevant to
other customers of your
institution.
Identifying
Risks
• How does this identified risk
affect a company’s ability to
repay debt?
The Key
Question
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
12
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS (CONT.)
Evaluation
• Evaluating
industry,
business, and
management
risks enables you
to ask questions
of customers and
prospects in
order to fully
identify, quantify,
and possibly
mitigate key risks.
Critical Thinking
• Evaluation
develops your
critical thinking
skills, integrating
economic,
political, and
market issues
into the overall
underwriting
process.
Risk Analysis
• Properly
analyzing these
risks gives you
information to
help structure the
loan in a fashion
that will ensure
the highest
probability of
repayment.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
13
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS (CONT.)
The focus of risk analysis is not to
eliminate risk, but to understand its
effect on your client’s ability to repay.
Certain fundamentals of risk
management have emerged as classic,
time-proven strategies.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
14
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS (CONT.)
Financial institutions that have (or want to gain) a
significant exposure to a particular industry usually have
industry experts on both the lending and credit analyst
teams.
Industry experts provide an intimate knowledge of an
industry and will:
• Identify, understand, evaluate, and mitigate risk.
• Provide expertise in the event of a loan workout situation with a
customer.
• Provide efficient marketing strategies in acquiring creditworthy
and profitable clients within a particular industry.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
15
JOIN. ENGAGE. LEAD.
ANALYZE NONFINANCIAL RISKS (CONT.)
The Process of
Understanding
Risk
Identify the
risk.
Analyze the
risk.
Quantify the
risk.
Mitigate the
risk.
Monitor the
risk.
Anticipate
unidentified
risks.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
16
JOIN. ENGAGE. LEAD.
UNDERSTAND THE NUMBERS
There are many benefits and risks associated with
establishing a banking relationship. As a lender, you
should know:
• How the requested funds are going to be used
and how they are anticipated to be repaid.
• How to identify, categorize, and prioritize all of
the risks inherent with the customer that are
known at the time of the analysis as well as
those that are anticipated to be in existence over
the period of the relationship.
3
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
17
JOIN. ENGAGE. LEAD.
UNDERSTAND THE NUMBERS (CONT.)
Before beginning any financial
analysis, it is important to
understand why companies and
individuals borrow money.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
18
JOIN. ENGAGE. LEAD.
New Clients
• It is doubly important to
probe into how and why
the loan request
originated.
Established
Relationships
• Your assessment of the
loan will be guided by
your knowledge of the
changes in your
customer’s asset
structure as it goes
through its business
cycle.
UNDERSTAND THE NUMBERS:
THE REASON FOR BORROWING
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
19
JOIN. ENGAGE. LEAD.
UNDERSTAND THE NUMBERS:
REASONS FOR BORROWING
Support increased
level of sales,
necessitating
increased funding
for inventory and
accts. rec.
Finance inefficiencies
in working capital
asset management,
i.e., slow down in
accounts receivable or
inventory turnover.
Purchase of long-term
operating assets or
investment assets,
including purchases
related to merger and
acquisition strategies.
Make personal
investments.
Show more cash
balances.
Repay trade creditors,
other bank debt,
“friendly” debt, taxes,
or any other liability
that has come due.
Repay long-term debt.
Make payments for
dividends and stock
repurchase programs
within the equity
account.
Pay expenses, but
hopefully not
unplanned operating
losses.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
20
JOIN. ENGAGE. LEAD.
UNDERSTAND THE NUMBERS:
REASONS FOR BORROWING
The reason for borrowing provides you with insights into
the company’s ability to repay.
• A complete understanding of the historical and
projected financial performance of your customer is key
to your analysis.
Once you are comfortable with the nature of the loan
request, the process of understanding the numbers can
begin.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
21
JOIN. ENGAGE. LEAD.
UNDERSTAND THE NUMBERS: THE PROCESS
To understand the numbers:
• Focus on the financial capacity of
the company as evidenced by the
information provided.
• Examine the accuracy of the
information.
• Examine the quality and
sustainability of financial
performance.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
22
JOIN. ENGAGE. LEAD.
UNDERSTAND THE NUMBERS:
THE PROCESS (CONT.)
Balance Sheet Quality Analysis
Analyze the balance sheet along with relevant liquidity and leverage
ratios.
Accounting Fundamentals
Review the auditor’s Engagement Letter, Financial Statements, and
Management Letter, as well as accounting fundamentals and generally
accepted auditing principles (GAAP).
Knowing the Auditor
Analyze the competency and reputation of the firm or individual
preparing your customer’s financial reports.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
23
JOIN. ENGAGE. LEAD.
UNDERSTAND THE NUMBERS:
THE PROCESS (CONT.)
Analyzing Financial Efficiency Cash Flow Drivers
Use profitability ratios and turnover ratios to analyze a company’s cash
flow drivers.
Cash Flow Statement Analysis
Analyze operating cash flow, investing cash flow, financing cash flow,
and cash flow ratios.
Income Statement Quality Analysis
Analyze revenues and costs along with income statement ratio
analysis.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
24
JOIN. ENGAGE. LEAD.
UNDERSTAND THE NUMBERS:
THE PROCESS (CONT.)
Company Financial Statements
Analyze the company’s financial statements and provide an overview.
Obviously, a small company will have a simpler chart of accounts, while a
large domestic or international corporation will be more complex.
Personal Financial Statement Analysis
Analyze the personal financial statement and tax return in the event that you
are lending directly to or seeking additional credit support from an individual.
Developing Projections
Determine the reasonableness of assumptions behind business fundamentals
and swing factors.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
25
JOIN. ENGAGE. LEAD.
STRUCTURE THE DEAL:
UNDERSTAND THE BUSINESS
Areas to
Study
The nature of the
business.
The nature of the
industry.
The impact of
economic
conditions.
The business
strategy.
The competencies
or deficiencies of
management.
Before completing a financial analysis, identify the characteristics
that influence a company’s success.
4
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
26
JOIN. ENGAGE. LEAD.
STRUCTURE THE DEAL (CONT.)
• Having completed the analysis
of the business, you can then
move to analyzing the financial
reports: historical and
forecasted.
• Understanding profitability and
cash flow, liquidity, and
leverage are key to structuring
the facility.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
27
JOIN. ENGAGE. LEAD.
STRUCTURE THE DEAL (CONT.)
Once you have identified the
underlying borrowing cause(s) and
understand both primary and
secondary repayment sources
available, the next step is to
structure the loan.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
28
JOIN. ENGAGE. LEAD.
STRUCTURE THE DEAL (CONT.)
Loan structure depends on the nature of
your customer’s business and how your
institution intends to provide financial
services to the company.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
29
JOIN. ENGAGE. LEAD.
STRUCTURE THE DEAL (CONT.)
• Loan structure is
important because
your customer
needs to clearly
understand the
boundaries within
which it can
operate and
continue to depend
upon your
institution for its
financial services
needs.
• The structure of
the deal
appropriately
establishes your
customer’s
expectations for
how your institution
will perform during
the term of the
relationship.
• Your customer
needs this
assurance in order
to run the business
efficiently, i.e., if
they operate in
accordance with
the terms and
conditions of the
loan agreement,
your customer can
expect funding
from your
institution.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
30
JOIN. ENGAGE. LEAD.
STRUCTURE THE DEAL (CONT.)
Structuring a
Customer
Relationship
Project how the company
will perform in the future,
including likely primary
and secondary repayment
sources.
Anticipate challenges
and problems that may
arise.
Match an appropriate
type of loan to both the
loan purpose and the
likely repayment
sources.Develop a set of
covenants that protects
your institution for the
duration of the
relationship.
Secure the credit
facility with collateral.
Consider requiring
additional loan support,
such as guarantees.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
31
JOIN. ENGAGE. LEAD.
PRICE THE DEAL
Determining the
appropriate pricing is
critical.
It ensures that your
financial institution will
be adequately
compensated for the
risk of the deal.
5
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
32
JOIN. ENGAGE. LEAD.
PRICE THE DEAL: COMPLEX FACTORS
DETERMINE THE FINAL RATE
Interest rate risk may
be managed through
the use of financial
futures and options.
Interest rate risk
mgmt. and loan
pricing are highly
interrelated through
the pricing models.
As the major source
of profitability for
many banks, loan
interest income
plays an important
role in shareholder
return.
Commonly, loan pricing
systems are based on
floating rates.
This pricing tactic
ties the loan rate
to a base rate
that responds to
movements of
money market
rates.
In addition to company-
specific variables,
factors that affect
pricing include:
Marketplace in
which the bank
operates.
General economic
conditions.
Matching the pricing
and maturity of the
bank’s assets and
liabilities.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
33
JOIN. ENGAGE. LEAD.
PRICE THE DEAL (CONT.)
Your financial institution’s
finance and lending divisions,
in conjunction with the ALCO,
will set loan pricing and
service fee strategies.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
34
JOIN. ENGAGE. LEAD.
PRESENT THE DEAL
Communicating your
findings in a cogent and
professional manner is a
critical step in getting your
proposal approved.
Credit decisions should not
be made on financial
statement analysis alone.
A credit review would not be complete
without an equally significant emphasis
on the qualitative issues such as the
ability of management, the competitive
business environment, and the economic
issues relating to the business.
6
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
35
JOIN. ENGAGE. LEAD.
PRESENT RE THE DEAL (CONT.)
Key Credit
Elements
Summaries &
Recommendations
Financial Analysis
and Projections
Economic &
Competitive
Environments
Management
Assessment
Sources of
Repayment
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
36
JOIN. ENGAGE. LEAD.
CLOSE THE DEAL
Closing the deal takes place
after the analysis,
structuring, and pricing
have been completed.
7
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
37
JOIN. ENGAGE. LEAD.
CLOSE THE DEAL: BEST PRACTICES
• Prepare a closing memorandum or detailed loan
documentation checklist.1.
• Provide sufficient time for the borrower and other
involved parties to gather documents.2.
• Provide instructions on how to complete your
standard documents to the borrower and other
parties; ensure that the forms are returned to you for
review prior to the closing.
3.
• Prepare drafts of loan documents and deliver them
to the borrower or other involved parties prior to the
closing with sufficient time for the recipients to have
the documents reviewed by their own legal counsel.
4.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
38
JOIN. ENGAGE. LEAD.
MONITOR THE RELATIONSHIP
By having an appropriate
structure to the relationship,
agreeable to both parties, you
have established a mechanism
for monitoring individual
transactions within a relationship.
8
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
39
JOIN. ENGAGE. LEAD.
MONITOR THE RELATIONSHIP (CONT.)
Monitoring can be accomplished in two ways:
1. Have a loan covenant
checklist that routinely
tracks your customer’s
adherence to covenants.
2. Require that an officer
of the company regularly
(e.g., quarterly) certify
as to the company’s
compliance with all of its
outstanding agreements.
Note: Failure to notify your customer of a covenant default may make
your institution’s future enforcement of the covenant difficult.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
40
JOIN. ENGAGE. LEAD.
MONITOR THE RELATIONSHIP (CONT.)
Periodic reviews, ratings, and audits can ensure
that the client is one that will create long-term
profitability for your bank.
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
41
JOIN. ENGAGE. LEAD.
For additional information about the credit process,
visit www.rmahq.org where you can:
• Find many related articles in the Credit and
Lending Studies Packs.
• Enroll in The Lending Decision Process for an
in-depth look at the lending process and learn
how to accomplish the best practices discussed
in this white paper.
• Subscribe to eMentor to make smarter, faster
credit decisions.
• Apply for the Credit Risk Certification exam.
LEARN MORE
Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending
42
JOIN. ENGAGE. LEAD.
SHARE THIS PRESENTATION
Visit http://www.rmahq.org for information on risk management.
RMA is a member-driven professional association whose sole
purpose is to advance sound risk principles in the financial services
industry.
RMA helps its members use sound risk principles to improve
institutional performance and financial stability, and enhance the risk
competency of individuals through information, education, peer
sharing, and networking.
Become a member today.

Mais conteúdo relacionado

Mais procurados

Chapter 3 - Risk Management - 2nd Semester - M.Com - Bangalore University
Chapter 3 - Risk Management - 2nd Semester - M.Com - Bangalore UniversityChapter 3 - Risk Management - 2nd Semester - M.Com - Bangalore University
Chapter 3 - Risk Management - 2nd Semester - M.Com - Bangalore UniversitySwaminath Sam
 
Credit management
Credit managementCredit management
Credit managementHannah Rain
 
Credit management chapter no 2
Credit management chapter no 2Credit management chapter no 2
Credit management chapter no 2sufyanraza1
 
Financial risk management ppt @ mba finance
Financial risk management  ppt @ mba financeFinancial risk management  ppt @ mba finance
Financial risk management ppt @ mba financeBabasab Patil
 
Investment Management Risk and Return
Investment Management Risk and ReturnInvestment Management Risk and Return
Investment Management Risk and ReturnDr. John V. Padua
 
Credit Risk Management
Credit Risk ManagementCredit Risk Management
Credit Risk ManagementAbdul Danka
 
Credit Risk Management ppt
Credit Risk Management pptCredit Risk Management ppt
Credit Risk Management pptSneha Salian
 
01.2 credit risk factors and measures
01.2   credit risk factors and measures01.2   credit risk factors and measures
01.2 credit risk factors and measurescrmbasel
 
Types of Risks and its Management in Banking
Types of Risks and its Management in BankingTypes of Risks and its Management in Banking
Types of Risks and its Management in BankingMohit Chhabra
 
Interest Rate Risk And Management
Interest Rate Risk And ManagementInterest Rate Risk And Management
Interest Rate Risk And Managementcatelong
 
Credit risk management lecture
Credit risk management lectureCredit risk management lecture
Credit risk management lectureAloke Saborna
 
Management of interest rate risk
Management of interest rate riskManagement of interest rate risk
Management of interest rate riskSonam Basia
 
Asset Liability Management in India Banks
Asset Liability Management in India BanksAsset Liability Management in India Banks
Asset Liability Management in India BanksAbhijeet Deshmukh
 
Credit Risk Management
Credit Risk ManagementCredit Risk Management
Credit Risk ManagementMaryum Sarwar
 

Mais procurados (20)

Chapter 3 - Risk Management - 2nd Semester - M.Com - Bangalore University
Chapter 3 - Risk Management - 2nd Semester - M.Com - Bangalore UniversityChapter 3 - Risk Management - 2nd Semester - M.Com - Bangalore University
Chapter 3 - Risk Management - 2nd Semester - M.Com - Bangalore University
 
Credit management
Credit managementCredit management
Credit management
 
Credit management chapter no 2
Credit management chapter no 2Credit management chapter no 2
Credit management chapter no 2
 
2. types of risks
2. types of risks2. types of risks
2. types of risks
 
Financial risk management ppt @ mba finance
Financial risk management  ppt @ mba financeFinancial risk management  ppt @ mba finance
Financial risk management ppt @ mba finance
 
Presentation on credit risk
Presentation on credit risk Presentation on credit risk
Presentation on credit risk
 
Bank lendings and loans ppt
Bank lendings and loans pptBank lendings and loans ppt
Bank lendings and loans ppt
 
Investment Management Risk and Return
Investment Management Risk and ReturnInvestment Management Risk and Return
Investment Management Risk and Return
 
Credit Risk Management
Credit Risk ManagementCredit Risk Management
Credit Risk Management
 
Credit management
Credit managementCredit management
Credit management
 
Camels Rating
Camels RatingCamels Rating
Camels Rating
 
Credit management
Credit managementCredit management
Credit management
 
Credit Risk Management ppt
Credit Risk Management pptCredit Risk Management ppt
Credit Risk Management ppt
 
01.2 credit risk factors and measures
01.2   credit risk factors and measures01.2   credit risk factors and measures
01.2 credit risk factors and measures
 
Types of Risks and its Management in Banking
Types of Risks and its Management in BankingTypes of Risks and its Management in Banking
Types of Risks and its Management in Banking
 
Interest Rate Risk And Management
Interest Rate Risk And ManagementInterest Rate Risk And Management
Interest Rate Risk And Management
 
Credit risk management lecture
Credit risk management lectureCredit risk management lecture
Credit risk management lecture
 
Management of interest rate risk
Management of interest rate riskManagement of interest rate risk
Management of interest rate risk
 
Asset Liability Management in India Banks
Asset Liability Management in India BanksAsset Liability Management in India Banks
Asset Liability Management in India Banks
 
Credit Risk Management
Credit Risk ManagementCredit Risk Management
Credit Risk Management
 

Semelhante a The 8 Steps of Credit Risk Management

The Rise and Risks of Lending to Non-Depository Financial Institutions
The Rise and Risks of Lending to Non-Depository Financial InstitutionsThe Rise and Risks of Lending to Non-Depository Financial Institutions
The Rise and Risks of Lending to Non-Depository Financial InstitutionsColleen Beck-Domanico
 
Credit Risk Certification (CRC): 5 Reasons to Up Your Game
Credit Risk Certification (CRC): 5 Reasons to Up Your GameCredit Risk Certification (CRC): 5 Reasons to Up Your Game
Credit Risk Certification (CRC): 5 Reasons to Up Your GameColleen Beck-Domanico
 
Being a Banker Today: The Changing Role of the Underwriter
Being a Banker Today: The Changing Role of the UnderwriterBeing a Banker Today: The Changing Role of the Underwriter
Being a Banker Today: The Changing Role of the UnderwriterColleen Beck-Domanico
 
How to Keep Your Balance as a Risk Manager
How to Keep Your Balance as a Risk ManagerHow to Keep Your Balance as a Risk Manager
How to Keep Your Balance as a Risk ManagerColleen Beck-Domanico
 
What You Really Need to Know about Commercial Real Estate Underwriting
What You Really Need to Know about Commercial Real Estate UnderwritingWhat You Really Need to Know about Commercial Real Estate Underwriting
What You Really Need to Know about Commercial Real Estate UnderwritingColleen Beck-Domanico
 
8 Risk Management Tips You Need to Know Now
8 Risk Management Tips You Need to Know Now8 Risk Management Tips You Need to Know Now
8 Risk Management Tips You Need to Know NowColleen Beck-Domanico
 
Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013Nidhi Gupta
 
Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013Nidhi Gupta
 
10 Components of a Robust Credit Culture
10 Components of a Robust Credit Culture10 Components of a Robust Credit Culture
10 Components of a Robust Credit CultureColleen Beck-Domanico
 
How to Instill Ethics in Commercial Lending: Understanding Due Diligence
How to Instill Ethics in Commercial Lending: Understanding Due DiligenceHow to Instill Ethics in Commercial Lending: Understanding Due Diligence
How to Instill Ethics in Commercial Lending: Understanding Due DiligenceColleen Beck-Domanico
 
FINANCIAL & CORPORATE COLLATERAL > portfolio // Linda C. Modica
FINANCIAL & CORPORATE COLLATERAL > portfolio // Linda C. ModicaFINANCIAL & CORPORATE COLLATERAL > portfolio // Linda C. Modica
FINANCIAL & CORPORATE COLLATERAL > portfolio // Linda C. ModicaLinda Modica
 
How to Measure and Mitigate Conduct Risk
How to Measure and Mitigate Conduct RiskHow to Measure and Mitigate Conduct Risk
How to Measure and Mitigate Conduct RiskColleen Beck-Domanico
 
How to Analyze Problem Loans and Minimize Losses
How  to Analyze Problem Loans and Minimize LossesHow  to Analyze Problem Loans and Minimize Losses
How to Analyze Problem Loans and Minimize LossesColleen Beck-Domanico
 
10 Aspects of a Good Risk Appetite Implementation Process
10 Aspects of a Good Risk Appetite Implementation Process10 Aspects of a Good Risk Appetite Implementation Process
10 Aspects of a Good Risk Appetite Implementation ProcessColleen Beck-Domanico
 
Recruiting, Developing, and Retaining Risk Talent
Recruiting, Developing, and Retaining Risk TalentRecruiting, Developing, and Retaining Risk Talent
Recruiting, Developing, and Retaining Risk TalentColleen Beck-Domanico
 

Semelhante a The 8 Steps of Credit Risk Management (20)

The Rise and Risks of Lending to Non-Depository Financial Institutions
The Rise and Risks of Lending to Non-Depository Financial InstitutionsThe Rise and Risks of Lending to Non-Depository Financial Institutions
The Rise and Risks of Lending to Non-Depository Financial Institutions
 
Credit Risk Certification (CRC): 5 Reasons to Up Your Game
Credit Risk Certification (CRC): 5 Reasons to Up Your GameCredit Risk Certification (CRC): 5 Reasons to Up Your Game
Credit Risk Certification (CRC): 5 Reasons to Up Your Game
 
Being a Banker Today: The Changing Role of the Underwriter
Being a Banker Today: The Changing Role of the UnderwriterBeing a Banker Today: The Changing Role of the Underwriter
Being a Banker Today: The Changing Role of the Underwriter
 
How to Keep Your Balance as a Risk Manager
How to Keep Your Balance as a Risk ManagerHow to Keep Your Balance as a Risk Manager
How to Keep Your Balance as a Risk Manager
 
King Kong vs Godzilla
King Kong vs GodzillaKing Kong vs Godzilla
King Kong vs Godzilla
 
Small Business Lending Outlook
Small Business Lending OutlookSmall Business Lending Outlook
Small Business Lending Outlook
 
What You Really Need to Know about Commercial Real Estate Underwriting
What You Really Need to Know about Commercial Real Estate UnderwritingWhat You Really Need to Know about Commercial Real Estate Underwriting
What You Really Need to Know about Commercial Real Estate Underwriting
 
8 Risk Management Tips You Need to Know Now
8 Risk Management Tips You Need to Know Now8 Risk Management Tips You Need to Know Now
8 Risk Management Tips You Need to Know Now
 
Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013
 
Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013
 
Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013Riskpro insurance advisory services 2013
Riskpro insurance advisory services 2013
 
10 Components of a Robust Credit Culture
10 Components of a Robust Credit Culture10 Components of a Robust Credit Culture
10 Components of a Robust Credit Culture
 
How to Instill Ethics in Commercial Lending: Understanding Due Diligence
How to Instill Ethics in Commercial Lending: Understanding Due DiligenceHow to Instill Ethics in Commercial Lending: Understanding Due Diligence
How to Instill Ethics in Commercial Lending: Understanding Due Diligence
 
Riskpro Insurance Advisory Services
Riskpro Insurance Advisory ServicesRiskpro Insurance Advisory Services
Riskpro Insurance Advisory Services
 
FINANCIAL & CORPORATE COLLATERAL > portfolio // Linda C. Modica
FINANCIAL & CORPORATE COLLATERAL > portfolio // Linda C. ModicaFINANCIAL & CORPORATE COLLATERAL > portfolio // Linda C. Modica
FINANCIAL & CORPORATE COLLATERAL > portfolio // Linda C. Modica
 
How to Measure and Mitigate Conduct Risk
How to Measure and Mitigate Conduct RiskHow to Measure and Mitigate Conduct Risk
How to Measure and Mitigate Conduct Risk
 
How to Analyze Problem Loans and Minimize Losses
How  to Analyze Problem Loans and Minimize LossesHow  to Analyze Problem Loans and Minimize Losses
How to Analyze Problem Loans and Minimize Losses
 
10 Aspects of a Good Risk Appetite Implementation Process
10 Aspects of a Good Risk Appetite Implementation Process10 Aspects of a Good Risk Appetite Implementation Process
10 Aspects of a Good Risk Appetite Implementation Process
 
Credit rating crisil
Credit rating crisilCredit rating crisil
Credit rating crisil
 
Recruiting, Developing, and Retaining Risk Talent
Recruiting, Developing, and Retaining Risk TalentRecruiting, Developing, and Retaining Risk Talent
Recruiting, Developing, and Retaining Risk Talent
 

Mais de Colleen Beck-Domanico

The Top 7 Risks Challenging the Financial Services Industry in the COVID-19 E...
The Top 7 Risks Challenging the Financial Services Industry in the COVID-19 E...The Top 7 Risks Challenging the Financial Services Industry in the COVID-19 E...
The Top 7 Risks Challenging the Financial Services Industry in the COVID-19 E...Colleen Beck-Domanico
 
How Modernized Training Is Influencing the Banking Industry
How Modernized Training Is Influencing the Banking IndustryHow Modernized Training Is Influencing the Banking Industry
How Modernized Training Is Influencing the Banking IndustryColleen Beck-Domanico
 
The Top Risks Challenging the Financial Services Industry
The Top Risks Challenging the Financial Services IndustryThe Top Risks Challenging the Financial Services Industry
The Top Risks Challenging the Financial Services IndustryColleen Beck-Domanico
 
How will climate change affect financial services?
How will climate change affect financial services?How will climate change affect financial services?
How will climate change affect financial services?Colleen Beck-Domanico
 
What Skills Will Risk Managers Need in 2028
What Skills Will Risk Managers Need in 2028What Skills Will Risk Managers Need in 2028
What Skills Will Risk Managers Need in 2028Colleen Beck-Domanico
 
Implementing the CECL Standard: 5 Actions to Take Now
Implementing the CECL Standard: 5 Actions to Take Now Implementing the CECL Standard: 5 Actions to Take Now
Implementing the CECL Standard: 5 Actions to Take Now Colleen Beck-Domanico
 
What is Blockchain and How Can It Change the Game for Financial Institutions?
What is Blockchain and How Can It Change the Game for Financial Institutions?What is Blockchain and How Can It Change the Game for Financial Institutions?
What is Blockchain and How Can It Change the Game for Financial Institutions?Colleen Beck-Domanico
 
Implementing the New BSA Customer Due Diligence Rule
Implementing the New BSA Customer Due Diligence RuleImplementing the New BSA Customer Due Diligence Rule
Implementing the New BSA Customer Due Diligence RuleColleen Beck-Domanico
 
Meeting the Challenge of HMDA Compliance
Meeting the Challenge of HMDA ComplianceMeeting the Challenge of HMDA Compliance
Meeting the Challenge of HMDA ComplianceColleen Beck-Domanico
 
3 Things You Should Know about Appraisals
3 Things You Should Know about Appraisals3 Things You Should Know about Appraisals
3 Things You Should Know about AppraisalsColleen Beck-Domanico
 
5 Commercial Real Estate (CRE) Challenges in 2017
5 Commercial Real Estate (CRE) Challenges in 20175 Commercial Real Estate (CRE) Challenges in 2017
5 Commercial Real Estate (CRE) Challenges in 2017Colleen Beck-Domanico
 
A Quick Guide to Credit Considerations in Hospitality Lending
A Quick Guide to Credit Considerations in Hospitality LendingA Quick Guide to Credit Considerations in Hospitality Lending
A Quick Guide to Credit Considerations in Hospitality LendingColleen Beck-Domanico
 
How to Make Your Specialty Services Lending Rock: Credit Considerations for 4...
How to Make Your Specialty Services Lending Rock: Credit Considerations for 4...How to Make Your Specialty Services Lending Rock: Credit Considerations for 4...
How to Make Your Specialty Services Lending Rock: Credit Considerations for 4...Colleen Beck-Domanico
 
A Quick Guide to Credit Considerations in Real Estate Lending
A Quick Guide to Credit Considerations in Real Estate LendingA Quick Guide to Credit Considerations in Real Estate Lending
A Quick Guide to Credit Considerations in Real Estate LendingColleen Beck-Domanico
 
How to Lower the Risk Profile of Your Auto Loan Portfolio
How to Lower the Risk Profile of Your Auto Loan PortfolioHow to Lower the Risk Profile of Your Auto Loan Portfolio
How to Lower the Risk Profile of Your Auto Loan PortfolioColleen Beck-Domanico
 
10 Key Principles of Operational Risk Management
10 Key Principles of Operational Risk Management10 Key Principles of Operational Risk Management
10 Key Principles of Operational Risk ManagementColleen Beck-Domanico
 
8 Things You Need to Know about HELOCs
8 Things You Need to Know about HELOCs8 Things You Need to Know about HELOCs
8 Things You Need to Know about HELOCsColleen Beck-Domanico
 

Mais de Colleen Beck-Domanico (20)

The Top 7 Risks Challenging the Financial Services Industry in the COVID-19 E...
The Top 7 Risks Challenging the Financial Services Industry in the COVID-19 E...The Top 7 Risks Challenging the Financial Services Industry in the COVID-19 E...
The Top 7 Risks Challenging the Financial Services Industry in the COVID-19 E...
 
The RMA COVID-19 Resource Center
The RMA COVID-19 Resource CenterThe RMA COVID-19 Resource Center
The RMA COVID-19 Resource Center
 
How Modernized Training Is Influencing the Banking Industry
How Modernized Training Is Influencing the Banking IndustryHow Modernized Training Is Influencing the Banking Industry
How Modernized Training Is Influencing the Banking Industry
 
The Top Risks Challenging the Financial Services Industry
The Top Risks Challenging the Financial Services IndustryThe Top Risks Challenging the Financial Services Industry
The Top Risks Challenging the Financial Services Industry
 
How will climate change affect financial services?
How will climate change affect financial services?How will climate change affect financial services?
How will climate change affect financial services?
 
5 Risks in Commercial Lending
5 Risks in Commercial Lending5 Risks in Commercial Lending
5 Risks in Commercial Lending
 
What Skills Will Risk Managers Need in 2028
What Skills Will Risk Managers Need in 2028What Skills Will Risk Managers Need in 2028
What Skills Will Risk Managers Need in 2028
 
Implementing the CECL Standard: 5 Actions to Take Now
Implementing the CECL Standard: 5 Actions to Take Now Implementing the CECL Standard: 5 Actions to Take Now
Implementing the CECL Standard: 5 Actions to Take Now
 
What is Blockchain and How Can It Change the Game for Financial Institutions?
What is Blockchain and How Can It Change the Game for Financial Institutions?What is Blockchain and How Can It Change the Game for Financial Institutions?
What is Blockchain and How Can It Change the Game for Financial Institutions?
 
Implementing the New BSA Customer Due Diligence Rule
Implementing the New BSA Customer Due Diligence RuleImplementing the New BSA Customer Due Diligence Rule
Implementing the New BSA Customer Due Diligence Rule
 
Meeting the Challenge of HMDA Compliance
Meeting the Challenge of HMDA ComplianceMeeting the Challenge of HMDA Compliance
Meeting the Challenge of HMDA Compliance
 
3 Things You Should Know about Appraisals
3 Things You Should Know about Appraisals3 Things You Should Know about Appraisals
3 Things You Should Know about Appraisals
 
Winning Tactics for Data Governance
Winning Tactics for Data GovernanceWinning Tactics for Data Governance
Winning Tactics for Data Governance
 
5 Commercial Real Estate (CRE) Challenges in 2017
5 Commercial Real Estate (CRE) Challenges in 20175 Commercial Real Estate (CRE) Challenges in 2017
5 Commercial Real Estate (CRE) Challenges in 2017
 
A Quick Guide to Credit Considerations in Hospitality Lending
A Quick Guide to Credit Considerations in Hospitality LendingA Quick Guide to Credit Considerations in Hospitality Lending
A Quick Guide to Credit Considerations in Hospitality Lending
 
How to Make Your Specialty Services Lending Rock: Credit Considerations for 4...
How to Make Your Specialty Services Lending Rock: Credit Considerations for 4...How to Make Your Specialty Services Lending Rock: Credit Considerations for 4...
How to Make Your Specialty Services Lending Rock: Credit Considerations for 4...
 
A Quick Guide to Credit Considerations in Real Estate Lending
A Quick Guide to Credit Considerations in Real Estate LendingA Quick Guide to Credit Considerations in Real Estate Lending
A Quick Guide to Credit Considerations in Real Estate Lending
 
How to Lower the Risk Profile of Your Auto Loan Portfolio
How to Lower the Risk Profile of Your Auto Loan PortfolioHow to Lower the Risk Profile of Your Auto Loan Portfolio
How to Lower the Risk Profile of Your Auto Loan Portfolio
 
10 Key Principles of Operational Risk Management
10 Key Principles of Operational Risk Management10 Key Principles of Operational Risk Management
10 Key Principles of Operational Risk Management
 
8 Things You Need to Know about HELOCs
8 Things You Need to Know about HELOCs8 Things You Need to Know about HELOCs
8 Things You Need to Know about HELOCs
 

Último

Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingHenry Tapper
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismBrian Lin
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...mwangimwangi222
 
20240315 _E-Invoicing Digiteal. .pptx
20240315 _E-Invoicing Digiteal.    .pptx20240315 _E-Invoicing Digiteal.    .pptx
20240315 _E-Invoicing Digiteal. .pptxFinTech Belgium
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfAdnet Communications
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneurabcisahunter
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Guillaume Ⓥ Sarlat
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources PresentationAdnet Communications
 
Mphasis - Schwab Newsletter PDF - Sample 8707
Mphasis - Schwab Newsletter PDF - Sample 8707Mphasis - Schwab Newsletter PDF - Sample 8707
Mphasis - Schwab Newsletter PDF - Sample 8707harshan90
 
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdfAdnet Communications
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?Stephen Perrenod
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.Arifa Saeed
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxsonamyadav7097
 

Último (20)

Effects & Policies Of Bank Consolidation
Effects & Policies Of Bank ConsolidationEffects & Policies Of Bank Consolidation
Effects & Policies Of Bank Consolidation
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB funding
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
 
20240315 _E-Invoicing Digiteal. .pptx
20240315 _E-Invoicing Digiteal.    .pptx20240315 _E-Invoicing Digiteal.    .pptx
20240315 _E-Invoicing Digiteal. .pptx
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
 
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation
 
Mphasis - Schwab Newsletter PDF - Sample 8707
Mphasis - Schwab Newsletter PDF - Sample 8707Mphasis - Schwab Newsletter PDF - Sample 8707
Mphasis - Schwab Newsletter PDF - Sample 8707
 
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptx
 

The 8 Steps of Credit Risk Management

  • 1. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 1 JOIN. ENGAGE. LEAD. THE 8 STEPS OF CREDIT RISK MANAGEMENT Safeguard your lending program by learning about the 8 steps of managing credit risk.
  • 2. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 2 JOIN. ENGAGE. LEAD. MANAGING CREDIT RISK Elements of Credit Risk Management Know your customer Analyze nonfinancial risks Understand the numbers Structure the deal Price the deal Present the deal Close the deal Monitor the relationship
  • 3. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 3 JOIN. ENGAGE. LEAD. 1 KNOW YOUR CUSTOMER • Knowing your customer is the foundation of the credit process. • You must operate on pertinent, accurate, and timely information.
  • 4. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 4 JOIN. ENGAGE. LEAD. KNOW YOUR CUSTOMER (CONT.) • The information you gather and the relationships you establish are critical to positioning yourself as a valued financial consultant and provider of financial products and services. • Establishing a good relationship can bring a long stream of equity to your institution.
  • 5. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 5 JOIN. ENGAGE. LEAD. • Find out as much as you can about the company and its industry prior to meeting with the customer. • This up-front exploration allows you to: – Make the most of the time that you have with the customer. – Set up an effective calling plan to guide you through the interview process. KNOW YOUR CUSTOMER: PRE-CALL PLANNING
  • 6. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 6 JOIN. ENGAGE. LEAD. KNOW YOUR CUSTOMER: THE INITIAL INTERVIEW Elicit key information. Listen for verbal cues and watch for non-verbal cues to help establish a customer’s needs. Establish your credibility as a knowledgeable professional and friendly businessperson. Ask questions about the company’s products and services, customers, suppliers, facilities, management, ownership, and history. Develop your initial observations about management’s behavior. Start to evaluate management’s qualifications and abilities to carry out the company’s business strategy. Investigate competition, market share, and the probable impact of economic conditions on the business. Identify the company’s business strategy and what the company must do to succeed.
  • 7. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 7 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS • Understand your customer’s business by analyzing nonfinancial risks. – Information gathered in this step is critical to positioning yourself as a financial consultant to your customer and a valued member of your financial institution’s lending team. 2
  • 8. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 8 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS (CONT.) An understanding of the economic and industry factors that influence a company’s financial stability and financing requirements is necessary before evaluating the numbers.
  • 9. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 9 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS (CONT.) There is risk to every line item on the balance sheet and income statement. Learn how to evaluate those risks, which fall into the broad categories of: • Industry • Business • Management
  • 10. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 10 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS: MICRO AND MACRO LEVELS • The concept of risk management can apply to a single loan or customer relationship (micro) or to an entire loan portfolio (macro). – At the micro level, a loan is a risk. – At the macro level, a portfolio of loans is a risk.
  • 11. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 11 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS: MICRO AND MACRO LEVELS (CONT.) • Your credit policy department will identify risk factors and query the entire loan portfolio (macro) to judge whether the particular risk is relevant to other customers of your institution. Identifying Risks • How does this identified risk affect a company’s ability to repay debt? The Key Question
  • 12. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 12 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS (CONT.) Evaluation • Evaluating industry, business, and management risks enables you to ask questions of customers and prospects in order to fully identify, quantify, and possibly mitigate key risks. Critical Thinking • Evaluation develops your critical thinking skills, integrating economic, political, and market issues into the overall underwriting process. Risk Analysis • Properly analyzing these risks gives you information to help structure the loan in a fashion that will ensure the highest probability of repayment.
  • 13. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 13 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS (CONT.) The focus of risk analysis is not to eliminate risk, but to understand its effect on your client’s ability to repay. Certain fundamentals of risk management have emerged as classic, time-proven strategies.
  • 14. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 14 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS (CONT.) Financial institutions that have (or want to gain) a significant exposure to a particular industry usually have industry experts on both the lending and credit analyst teams. Industry experts provide an intimate knowledge of an industry and will: • Identify, understand, evaluate, and mitigate risk. • Provide expertise in the event of a loan workout situation with a customer. • Provide efficient marketing strategies in acquiring creditworthy and profitable clients within a particular industry.
  • 15. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 15 JOIN. ENGAGE. LEAD. ANALYZE NONFINANCIAL RISKS (CONT.) The Process of Understanding Risk Identify the risk. Analyze the risk. Quantify the risk. Mitigate the risk. Monitor the risk. Anticipate unidentified risks.
  • 16. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 16 JOIN. ENGAGE. LEAD. UNDERSTAND THE NUMBERS There are many benefits and risks associated with establishing a banking relationship. As a lender, you should know: • How the requested funds are going to be used and how they are anticipated to be repaid. • How to identify, categorize, and prioritize all of the risks inherent with the customer that are known at the time of the analysis as well as those that are anticipated to be in existence over the period of the relationship. 3
  • 17. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 17 JOIN. ENGAGE. LEAD. UNDERSTAND THE NUMBERS (CONT.) Before beginning any financial analysis, it is important to understand why companies and individuals borrow money.
  • 18. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 18 JOIN. ENGAGE. LEAD. New Clients • It is doubly important to probe into how and why the loan request originated. Established Relationships • Your assessment of the loan will be guided by your knowledge of the changes in your customer’s asset structure as it goes through its business cycle. UNDERSTAND THE NUMBERS: THE REASON FOR BORROWING
  • 19. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 19 JOIN. ENGAGE. LEAD. UNDERSTAND THE NUMBERS: REASONS FOR BORROWING Support increased level of sales, necessitating increased funding for inventory and accts. rec. Finance inefficiencies in working capital asset management, i.e., slow down in accounts receivable or inventory turnover. Purchase of long-term operating assets or investment assets, including purchases related to merger and acquisition strategies. Make personal investments. Show more cash balances. Repay trade creditors, other bank debt, “friendly” debt, taxes, or any other liability that has come due. Repay long-term debt. Make payments for dividends and stock repurchase programs within the equity account. Pay expenses, but hopefully not unplanned operating losses.
  • 20. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 20 JOIN. ENGAGE. LEAD. UNDERSTAND THE NUMBERS: REASONS FOR BORROWING The reason for borrowing provides you with insights into the company’s ability to repay. • A complete understanding of the historical and projected financial performance of your customer is key to your analysis. Once you are comfortable with the nature of the loan request, the process of understanding the numbers can begin.
  • 21. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 21 JOIN. ENGAGE. LEAD. UNDERSTAND THE NUMBERS: THE PROCESS To understand the numbers: • Focus on the financial capacity of the company as evidenced by the information provided. • Examine the accuracy of the information. • Examine the quality and sustainability of financial performance.
  • 22. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 22 JOIN. ENGAGE. LEAD. UNDERSTAND THE NUMBERS: THE PROCESS (CONT.) Balance Sheet Quality Analysis Analyze the balance sheet along with relevant liquidity and leverage ratios. Accounting Fundamentals Review the auditor’s Engagement Letter, Financial Statements, and Management Letter, as well as accounting fundamentals and generally accepted auditing principles (GAAP). Knowing the Auditor Analyze the competency and reputation of the firm or individual preparing your customer’s financial reports.
  • 23. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 23 JOIN. ENGAGE. LEAD. UNDERSTAND THE NUMBERS: THE PROCESS (CONT.) Analyzing Financial Efficiency Cash Flow Drivers Use profitability ratios and turnover ratios to analyze a company’s cash flow drivers. Cash Flow Statement Analysis Analyze operating cash flow, investing cash flow, financing cash flow, and cash flow ratios. Income Statement Quality Analysis Analyze revenues and costs along with income statement ratio analysis.
  • 24. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 24 JOIN. ENGAGE. LEAD. UNDERSTAND THE NUMBERS: THE PROCESS (CONT.) Company Financial Statements Analyze the company’s financial statements and provide an overview. Obviously, a small company will have a simpler chart of accounts, while a large domestic or international corporation will be more complex. Personal Financial Statement Analysis Analyze the personal financial statement and tax return in the event that you are lending directly to or seeking additional credit support from an individual. Developing Projections Determine the reasonableness of assumptions behind business fundamentals and swing factors.
  • 25. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 25 JOIN. ENGAGE. LEAD. STRUCTURE THE DEAL: UNDERSTAND THE BUSINESS Areas to Study The nature of the business. The nature of the industry. The impact of economic conditions. The business strategy. The competencies or deficiencies of management. Before completing a financial analysis, identify the characteristics that influence a company’s success. 4
  • 26. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 26 JOIN. ENGAGE. LEAD. STRUCTURE THE DEAL (CONT.) • Having completed the analysis of the business, you can then move to analyzing the financial reports: historical and forecasted. • Understanding profitability and cash flow, liquidity, and leverage are key to structuring the facility.
  • 27. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 27 JOIN. ENGAGE. LEAD. STRUCTURE THE DEAL (CONT.) Once you have identified the underlying borrowing cause(s) and understand both primary and secondary repayment sources available, the next step is to structure the loan.
  • 28. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 28 JOIN. ENGAGE. LEAD. STRUCTURE THE DEAL (CONT.) Loan structure depends on the nature of your customer’s business and how your institution intends to provide financial services to the company.
  • 29. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 29 JOIN. ENGAGE. LEAD. STRUCTURE THE DEAL (CONT.) • Loan structure is important because your customer needs to clearly understand the boundaries within which it can operate and continue to depend upon your institution for its financial services needs. • The structure of the deal appropriately establishes your customer’s expectations for how your institution will perform during the term of the relationship. • Your customer needs this assurance in order to run the business efficiently, i.e., if they operate in accordance with the terms and conditions of the loan agreement, your customer can expect funding from your institution.
  • 30. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 30 JOIN. ENGAGE. LEAD. STRUCTURE THE DEAL (CONT.) Structuring a Customer Relationship Project how the company will perform in the future, including likely primary and secondary repayment sources. Anticipate challenges and problems that may arise. Match an appropriate type of loan to both the loan purpose and the likely repayment sources.Develop a set of covenants that protects your institution for the duration of the relationship. Secure the credit facility with collateral. Consider requiring additional loan support, such as guarantees.
  • 31. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 31 JOIN. ENGAGE. LEAD. PRICE THE DEAL Determining the appropriate pricing is critical. It ensures that your financial institution will be adequately compensated for the risk of the deal. 5
  • 32. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 32 JOIN. ENGAGE. LEAD. PRICE THE DEAL: COMPLEX FACTORS DETERMINE THE FINAL RATE Interest rate risk may be managed through the use of financial futures and options. Interest rate risk mgmt. and loan pricing are highly interrelated through the pricing models. As the major source of profitability for many banks, loan interest income plays an important role in shareholder return. Commonly, loan pricing systems are based on floating rates. This pricing tactic ties the loan rate to a base rate that responds to movements of money market rates. In addition to company- specific variables, factors that affect pricing include: Marketplace in which the bank operates. General economic conditions. Matching the pricing and maturity of the bank’s assets and liabilities.
  • 33. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 33 JOIN. ENGAGE. LEAD. PRICE THE DEAL (CONT.) Your financial institution’s finance and lending divisions, in conjunction with the ALCO, will set loan pricing and service fee strategies.
  • 34. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 34 JOIN. ENGAGE. LEAD. PRESENT THE DEAL Communicating your findings in a cogent and professional manner is a critical step in getting your proposal approved. Credit decisions should not be made on financial statement analysis alone. A credit review would not be complete without an equally significant emphasis on the qualitative issues such as the ability of management, the competitive business environment, and the economic issues relating to the business. 6
  • 35. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 35 JOIN. ENGAGE. LEAD. PRESENT RE THE DEAL (CONT.) Key Credit Elements Summaries & Recommendations Financial Analysis and Projections Economic & Competitive Environments Management Assessment Sources of Repayment
  • 36. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 36 JOIN. ENGAGE. LEAD. CLOSE THE DEAL Closing the deal takes place after the analysis, structuring, and pricing have been completed. 7
  • 37. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 37 JOIN. ENGAGE. LEAD. CLOSE THE DEAL: BEST PRACTICES • Prepare a closing memorandum or detailed loan documentation checklist.1. • Provide sufficient time for the borrower and other involved parties to gather documents.2. • Provide instructions on how to complete your standard documents to the borrower and other parties; ensure that the forms are returned to you for review prior to the closing. 3. • Prepare drafts of loan documents and deliver them to the borrower or other involved parties prior to the closing with sufficient time for the recipients to have the documents reviewed by their own legal counsel. 4.
  • 38. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 38 JOIN. ENGAGE. LEAD. MONITOR THE RELATIONSHIP By having an appropriate structure to the relationship, agreeable to both parties, you have established a mechanism for monitoring individual transactions within a relationship. 8
  • 39. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 39 JOIN. ENGAGE. LEAD. MONITOR THE RELATIONSHIP (CONT.) Monitoring can be accomplished in two ways: 1. Have a loan covenant checklist that routinely tracks your customer’s adherence to covenants. 2. Require that an officer of the company regularly (e.g., quarterly) certify as to the company’s compliance with all of its outstanding agreements. Note: Failure to notify your customer of a covenant default may make your institution’s future enforcement of the covenant difficult.
  • 40. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 40 JOIN. ENGAGE. LEAD. MONITOR THE RELATIONSHIP (CONT.) Periodic reviews, ratings, and audits can ensure that the client is one that will create long-term profitability for your bank.
  • 41. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 41 JOIN. ENGAGE. LEAD. For additional information about the credit process, visit www.rmahq.org where you can: • Find many related articles in the Credit and Lending Studies Packs. • Enroll in The Lending Decision Process for an in-depth look at the lending process and learn how to accomplish the best practices discussed in this white paper. • Subscribe to eMentor to make smarter, faster credit decisions. • Apply for the Credit Risk Certification exam. LEARN MORE
  • 42. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending 42 JOIN. ENGAGE. LEAD. SHARE THIS PRESENTATION Visit http://www.rmahq.org for information on risk management. RMA is a member-driven professional association whose sole purpose is to advance sound risk principles in the financial services industry. RMA helps its members use sound risk principles to improve institutional performance and financial stability, and enhance the risk competency of individuals through information, education, peer sharing, and networking. Become a member today.