The Risk Management Association (RMA) and Automated Financial Systems, Inc. (AFS) sponsored the second annual survey on Enterprise Credit Risk Management Architecture during the Fall 2008. RMA and AFS conducted the first Credit Data Quality Survey in Fall 2007, when the current credit crisis just began and was thought to be limited.
One of the clear outcomes of the current state of the credit crisis is the quality of credit data. Moreover, key finding has been the lack of a clearly defined goal or strategy to achieve credit data quality.
Without a clear-cut standard of achievement, the consequences (intended and unintended) continue to manifest themselves on a tactical and seemingly random fashion. Some of these relate to appropriate capital allocation, collateral monitoring, unprecedented volatility in risk assessments, probability of default and loss given default calculations, new loan impairment and fair value accounting and reporting requirements, amount of credit outstandings versus committed exposures and an overall lack of confidence by executive management in the quality and level of reporting both internally and externally.
One of the key findings from the survey concerns the benefits of increasing data supporting credit risk management. They are:
1. Improved transparency in reporting results to the market,
2. More timely identification of emerging problems, and
3. More efficient capital allocation/utilization.
Institutions have been criticized by regulators, stakeholders, and the financial press during 2008 over these issues.
Many valuable insights are presented in this important survey. The Executive Summary of this study provides an overview. The detailed results will provide you with extensive coverage of this topical, relevant study.
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