“In this issue of the Credit Pulse, we look at credit risk considering the macroeconomic and geopolitical uncertainties that continue to shape the financial services industry in the opening months of 2022. We assess lessons learned during the pandemic and how they’re driving lenders to recalibrate operations to enable greater resiliency in the face of future contingencies” where it current states "A financial institution’s ability to maintain profitability through times of economic certainty or uncertainty is undoubtedly impacted by its careful management of the credit portfolio. Protiviti’s Credit Pulse is intended to provide a summary and analysis of economic indicators impacting financial institutions and the strength of their credit portfolio while providing industry-leading insights and pragmatic recommendations to address areas of weakness".
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Credit risk is perhaps the most fundamental risk financial services organizations face. Although this risk has existed for hundreds of years, the current environment has led to ever increasing pressure to ensure that credit risk management practices provide a frictionless customer experience, maximize efficiency, and ensure clear evidence of compliance with institutional credit standards and regulatory expectations. Outdated and insufficient credit risk management practices can lead to increasing credit losses, suboptimal customer experience, depressed margins, and regulatory scrutiny.
Our Credit Risk Management professionals help organizations maximize their returns by assessing, designing, and implementing efficient and effective credit risk operations. Our professionals leverage experience as former lenders, regulators, and risk managers to identify root causes, optimize operations, and improve practices. We offer a suite of credit risk management consulting and internal audit services that cover the entire credit life cycle ranging from risk appetite, policies and procedures, underwriting and originations, ongoing monitoring, problem loan management, credit and loan review, regulatory and financial reporting requirements (e.g. CECL, Basel, etc.), lender and portfolio due diligence, and ongoing monitoring and reporting.
How we can help:
- Credit / Loan Review Services: analyze credit oversight strategies, organizational structure, reporting, loan portfolios, investment portfolios and individual credits to evaluate credit quality adherence to lending standards, comparison to best practices, account managemnet strategies, and performance.
- Credit Operations Assessment Design and Implementation: improve credit operational efficiency and effectiveness through credit risk process optimization, system optimization, implementing data-enabled strategies, organizational structures, and metrics.
- Transaction / Acquisition and Lender Due Diligence: analyze proposed or existing transactions by conducting lender and financial due diligence procedures on target companies, operationas, processes, reporting and/or assets.
- Credit Process Internal Audit Reviews: assess risk management and control systems in place to manage core operations throughout the credit lifecycle.
- Credit Risk Software and Tool Assistance: develop business requirement documentation tailored to business needs and risk appetite for implementation of credit risk software.
- Liquidity Risk Management and Stress Testing: perform process reviews to determine if your institution is adequately measuring and monitoring interest rate and liquidity risk postions and forecast cash flows. Develop process design, implement governance, documentation, internal control frameworks, management and regulatory reporting, data quality remediation, review and challenge support and CFO attestation for DFAST/CCAR stress testing.
- Regulatory Reporting: provide data capture, data clean up, template creation, and data aggregation technology development services for regulatory reporting needs.