Risk Management - Case Studies
Credit Policy Manual Design and Rewrite
Name of institution/s
Major Global International Bank with operations in over a 100 countries
Major Islamic Bank, UAE
Major Pakistani Bank
European Subsidiary of Arab Bank, London
Major Georgian Bank
Scope of work
BankT&D Consulting were tasked in all these assignments to develop/update Credit Policy Manuals across the business and functional risk segments. The assignment included first assessing the ‘as is state’, identification of gaps versus best practice, their adaptation and inclusion after business and risk management consensus and then the production and implementation of the Manual through training sessions and workshops. In one case the institution had businesses in over 100 countries and the Manual had to have ‘local buy in’ and be designed in a manner that minimized exceptions and facilitated business across multiple geographies.
BankT&D Consulting delivered to all these institutions a comprehensive and practical Group Credit Policy Manual (GCPM) that clearly articulated each institution’s guiding principles and general lending (credit risk) policies. For ease-of-use and inclusion of future policy amendments, the GCPM was designed to allow for page-by-page changes. The soft-copy of the manual is stored in a secure electronically indexed form, which allowed for search capability by key-words, searches by any combination of key-words, or by entire phrase. Exceptions and disruptions to the business were minimized and global best/dominant practices adapted to the institutions’ credit philosophy, bench strength and complexity of business. The manuals were ‘rolled out’ through interactive training sessions and web- based training materials.
Review Bank’s Retail Risk Organization and Structure
Name of Institution
Major Saudi Arabian Bank
Scope of work
A major regional bank in Saudi Arabia with a large consumer presence wanted to review its risk organisation and structure. The questions it needed answered were: What is the right risk organisation for the consumer business? Is there sufficient risk oversight? What is the role and responsibility of the regional risk office and how should it be staffed? Who should be responsible for portfolio analytics? Is the analytical capability adequate? How should the talent pool in the risk organisation be leveraged? How effective is the current underwriting capability? How effective is the collections capability? Are the existing products well structured or do the policies/programs need to be amended? Are there hidden risks in the policy or process?
The scope of the project was wide and covered the entire consumer cycle ranging from sales and initiation to collections. The project required a review of all the consumer product programs, operating process manuals, MIS decks, audit reports, business plans etc. In addition, it involved several meetings and discussions with risk business heads, product heads, collection staff, operations staff, finance officers, analytics staff, etc . It also involved specific drill down of MIS and preparation of simulations to analyse trends and a full review of current operational processes to identify any risks .
The assignment was completed in over three months after extensive investigation, staff interviews and analysis. An exhaustive report covering all aspects of the project was completed by a BankT&D Consulting credit expert . Anew organisational structure was recommended to optimise risk controls and eliminated the redundancy of layering as well as duplicate analysis and systems. Roles and responsibilities were clearly defined. A framework to develop credit staffing resources and sharpen their skills was provided. All the recommendations relating to organisational issues were subsequently implemented.
The product and portfolio recommendations were exhaustive and highlighted both major and minor risk issues in every product line together with solutions for immediate and medium-term implementation. Inadequacies in MIS and process were highlighted together with recommendations for improvement. A template was provided for ongoing portfolio reviews that covered key risks and highlighted any risky trends. The impact of implementation was also provided. The “quick kill” recommendations were immediately implemented by the bank and a plan with target dates was put in place to implement the other recommendations that required system amendments or other enhancements.