From policy to proposal, from proposal to approval, from approval to disbursement, from disbursement to analytics, the credit management function seems to have its fingers everywhere. If you run the credit management function you need to be comfortable with all the dimensions of the function.

The challenge in credit risk however is the inherent conflict built in the nature of these dimensions. Proposals and approvals are market driven. Documentation and charges are legal. Analytics are performance and behavior driven. Provisions, recoveries and special assets use a completely different language and rely on negotiations, positions, etc.   Hence the requirement for the head of credit risk to come with experience in both business development and corporate banking as well as special assets and credit administration. To this mix add technology and analytics.


Credit Analytics

Our credit analytics include:

  • Breakdown by product, region, branches and segments of the days a payment is overdue (days past due or DPD analysis) across the entire banking franchise and how it compares with the overall industry average
  • Client or industry specific credit downgrade by internal or external credit rating systems
  • Changes in sector, segment, region provisions or loan classifications
  • Changes in recoveries and write offs
  • Bank exposures concentration across sectors, segments, products, markets and clients

The DPD tracking piece is the most crucial analytic generated by the credit management function. It is used not just in collections tracking and client management but also in provisions projections and capital management. But the source and control of DPD data is crucial. If the credit management function relies on branches to generate and compile DPD data they are just asking for trouble. For DPD data to be reliable and effective it should be generated automatically without manual intervention by any concerned or related party.

Credit Risk Management in Vision ERM

The Vision ERM platform offers two separate components:

  • A Basel II Calculation engine that supports Simplified, Standardized and Internal Ratings Based (IRB) approach for calculation of capital adequacy.  Features include risk weight configuration, risk calculation parameters and exposure tracking across categories
  • A DPD and Provisions tracking calculator used for calculation of PD, LGD and EAD estimates
Image Caption
Image Caption
Image Caption
Image Caption
Image Caption
Image Caption