What are the Concerns of Chief Credit Officers for 2018?

During the latest installment of RMA’s Credit Risk Management Audio Conference Series, a panel of chief credit officers shared their views on emerging credit risks and the issues their banks are facing today.

Rob Edwards, EVP & chief credit officer, United Community Bank and Tony Ross, EVP & chief credit officer, Woodforest National Bank, discussed how their banks find the right balance in prioritizing the processes that are key controls to their credit risk management health. In light of regulators’ increased attention on the state of controls within banks, both banks complete a risk assessment and add controls to mitigate those risks through the three lines of defense. Various metrics are used to determine where key risk indicators lie.

Cyber risk remains a daunting issue for banks to address. Both panelists have employed strategies to create an overarching view of their bank’s cyber risk. Ross’ bank has created individual groups, which report to the executive committee, to handle cyber risk and other external threats, i.e., fraud, AML. Periodic meetings keep all players informed and encourage dialogue that breaks down silos.

Non-traditional lenders and fintech firms have created both opportunities and risks for traditional banks. Ross’ bank observes the marketplace and picks up the best practices of these firms to improve how they do business. Edwards acknowledges the necessity for banks to incorporate technology, but advises that banks continue to do what they do best while keeping the needs of customers foremost.

Both panelists have targeted several emerging underwriting risks in 2018. Ross’ bank is watching the competitive landscape, loose structures, and staying within the bank’s policies. Edwards’ bank is mindful of interest rate risk sensitivity, leveraged lending, and sensitizing cap rates all of which can be early warning signs of the impending recession.

Join us for the next installment of the Credit Risk Management Audio Conference Series on March 13, Maintaining Credit Culture in a Changing Regulatory Environment.

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