To help financial institutions better understand their commercial lending risk exposure, RMA has teamed up with Automated Financial Systems (AFS) to provide an independent, external benchmarking service. The Risk Analysis Service offers a never-before-available look at the performance and composition of portfolio risk. The Risk Analysis Service analyzes participating institutions’ commercial loan information and reports on their risk profile, as well as how they compare to the industry.
Risk Analysis Service brochure (PDF)
The service provides information used for risk self-assessment purposes by exposing segments of the portfolio where excessive risk is occurring. Designed primarily to enhance sound risk management practices within the industry by providing consistently prepared, industry-standard benchmarks, the service helps both line and risk managers meet stringent new reporting requirements. The Risk Analysis Service provides information that can be used to gain further insight into commercial loan default and loss trends and to refine risk-rating systems.
Key reporting dimensions of the service include:
- Line of business
- Risk ratings and exposure at default
- Industry
- Product
- Collateral
- Deal size
- Geography
- Vintage
- Delinquency
- Net charge-offs and nonaccruals
Benefits of participation are multifaceted. They include a forum for the candid and confidential sharing of credit risk information, along with the quarterly deliverable providing a sound base from which to make decisions. In addition, the Risk Analysis Service is dynamic and responsive to the needs of the participants and proactively identifies trends in data and analysis requirements. The Web-based reporting tool allows you to query data and present results. Using the tool, you can easily and quickly view composite information, read standard reports, or even create and save your own reports. In addition to quarterly data, participation in the Risk Analysis Service provides your institution with periodic Web casts, an annual meeting, and periodic publications.
In addition, based on this success and the demands of existing service participants, RMA and AFS are using the same proven delivery model and data integration capabilities to expand the scope of the service to commercial real estate.
The objective of the Risk Analysis Service for Commercial Real Estate is to provide information that is useful to both line and risk managers and to establish an industry-leading standard for measuring and comparing commercial real estate exposures. This first-of-its kind credit risk benchmarking for commercial real estate enables lending institutions to compare their respective risk profiles in defined portfolio segments to industry peers. The service provides an ongoing ability to monitor an institution’s relative exposure to risk in these key portfolio segments and to manage policy, pricing, and compliance accordingly. By examining trends over time, participants are able to relate actual loan performance to portfolio segment risk ratings and adjust credit policies accordingly.
Benefits of the Service
An industry-led initiative, the Risk Analysis Service fulfills an informational need for credit risk benchmarking that serves as a meaningful basis for self-assessment under ever-changing market conditions.
For more information, please contact your regional manager.