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Remodeling Risk Management with a New Credit Risk Expert Team

september 29, 2020

There has been a trend developing within the financial industry to consolidate the task of managing all regulatory changes within credit risk into a single team. For the last few months, we’ve been working closely with one of our clients to set up just such a team – one they decided to name the Credit Risk Expert Team. This type of restructuring and the consequential follow-through has many advantages once it’s up and running. It’s one central place in the organization to create, maintain, and manage regulatory changes related to credit risk, with oversight on implementing the requirements and validation of the outcomes. It also means higher data quality, more transparent workflows, better overall communication between departments and stakeholders while promoting ownership and accountability throughout the process.

So, how did we do it?

We began by working with the bank to do an in-depth analysis of how they were currently running things and making a road map with specific, tangible goals and milestones – attached to timeframes – and how we would get there. This new team would be responsible for setting requirements based on laws and legislation and the bank’s policies and standards to be compliant and commercially valid. We also set out to define a clear overarching goal for the team: bridge the gap between regulations and the people who have to implement them. We worked with this new team to draft, define and refine policy documents that are not only specific and thorough – but in a language that the stakeholders (for instance and the business lines and IT departments) could easily understand. On top of all of this, we wanted to make sure all the documentation that this new team would produce would be standardized, complete, and, therefore, easier to manage.

Challenges and Solutions

Naturally, an undertaking such as this is not without its fair share of challenges. One of these was the fact that we were doing work with our client that was new for them; they were essentially creating as they were doing and refining along the way. Another challenge was that even though we were co-creating a new department, we did not create it in a vacuum. Indeed, this bank, like every other financial institution, had other programs up and running and, of course, business as usual, happening all around us. Because of this, we had to continually accommodate complicated interdependencies, schedules, and priorities.

Another challenging element was just how complex and detailed we were pushing these guidelines to be. We wanted as little room for interpretation and error as possible as they need to be held, understood, and executed by different departments. To ensure this, we edited and refined them quite a bit – continually asking for feedback – does this make sense? How do you interpret this? And we corrected, distilled, and creatively problem solved with our client until we got there.

Lastly, we had to ensure that this new team could explain and prove their plans to their management. This meant creating detailed timelines and frameworks that were easily understood and outlined proven methods.

Where are we now?

We’re currently working with a team of eight people between ourselves and the client, focusing on delivering new products and are on track to scale-up as planned. We still come across challenges as the project and the team evolves, which we meet.

If you’re interested in learning more about this case study or how we could set up a similar team for you, reach out.

As always, thanks for reading,