Modeling Concentration Risk

Presented by Randy Thompson

This session covers how stochastic risk management tools can be used to set effective and productive policies and procedures long before operational problems call for changes.

Highlights

Establishing timely and effective loan policies and procedures is critical for financial institutions. Unfortunately, many policies and procedures are established in reaction to an adverse event. There are better methods to proactively establish policies and procedures using stochastic models.

Concentration Risk policy is one of the more important loan related polices a credit union should have. Sadly, few have such policies are based on stochastically derived methods.

Takeaways

• How to use stochastically derived Risk Based Lending and Credit Migration tools to proactively establish and reset policies and procedures
  
• How to set Concentration Risk policy using stochastically derived research and modeling
  
• The advantages of setting loan policies using stochastic methods compared to more traditional methods
  
  

Who Should Watch

Board members, CEOs, CFOs, Compliance Officers