CREDIT RISK CONSULTING
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CREDIT RISK CONSULTING

DFRC has a proprietary ALLL Model that uses an ALLL Barometer to support ALLL adequacy. This model has been extended to CONCENTRATION ANALYSES AND STRESS TESTING. The approach dramatically reduces the time to do credit portfolio analyses yet provides comprehensive and meaningful support. It focuses on capital at risk for expected and stress scenarios.

Our partners have conducted numerous due diligence reviews, credit administration engagements, and loan reviews to assess the accuracy of risk rating systems, loss potential in the portfolio, and the adequacy of credit risk management practices.

Credit risk is a fast changing discipline at the leading edge of risk management practice. The financial crisis brought into focus the need for effective risk management control and highlighted many deficiencies of clients’ approaches to measuring credit risk. This has resulted in financial institutions reviewing their approach to the management of credit risk from a process, organisational and systems perspective. At the same time many institutions are continuing to develop more sophisticated methods of risk management, such as measuring and hedging Credit Valuation Adjustment (CVA). Credit risk is also an area in which there are many existing and forthcoming regulations impacting financial institutions such as Basel III (see also Regulatory Risk Management).

We can help clients redesign their entire credit risk framework or focus on specific areas such as:

  • Credit Risk Policy
  • Methodology & Modelling (e.g. modelling counterparty risk, economic capital, rating models)
  • Credit Risk Systems – Selection, Design or Implementation
  • Credit Valuation Adjustment
  • Collateral Management
  • Counterparty Due Diligence
  • Organisational Structure & Processes

In certain key areas within credit risk, we have devised a structured approach to delivering change. These are: the DFRC Delivery Lifecycle for Counterparty Risk and the DFRC Delivery Lifecycle for CVA. These encompass a series of specific services and tools tailored respectively to counterparty risk and CVA.

In unstable and uncertain economic climates, opportunities exist for proactive organisations to enhance their performance. Due diligence, credit policy, strategic planning, best practices in lending, credit process review, expert witness, and regulatory consulting are all critical to navigating tumultuous situations and maximizing opportunities for shareholder value.

Our client organisations deserve a team with expertise in all of these areas. DFRC doesn’t just provide clients with recommendations; we assist them in implementing the real changes that make a difference. They deserve more than a report; they deserve a team of experts, with experience managing similar challenges, to assist them in implementing solutions and achieving milestones to reduce the level of risk in their loan portfolio.

CREDIT POLICY EVALUATION

DFRC can evaluate a Client’s existing or proposed new credit policy to determine if it meets best practices in the industry and regulatory expectations, and provide assistance in re-writing existing bank policy or preparing new credit policies and supporting procedures.

REGULATORY CONSULTING

DFRC Partners have performed numerous consulting projects demanded by virtually every national banking regulators. These engagements are performed for the clients that have been criticized by regulators in Reports of Examination (ROE), Consent Orders (Memos of Understanding, Supervisory Agreements) and Cease and Desist Orders.   

LENDING & CREDIT CONSULTING

DFRC performs a number of other specific consulting services, including credit portfolio evaluation, asset recovery consulting, and adequacy of staffing capabilities and sufficiency, to name a few.      
 

Commercial Credit Practice Review and Assessment Services 
DFRC can provide a detailed review of a Client’s Credit Risk Management process, including the people, processes and systems that support it, and a targeted review of specific aspects of the Credit Risk Management process or individual business segments such as leasing, real estate or asset based lending. DFRC can also provide assistance with evaluation, recommendations and responses to regulatory actions and agreements  

ALLL METHODOLOGY REVIEW SERVICES

DFRC can analyze the methodology utilized in the calculation of a client’s Allowance for Loan and Lease Losses (ALLL) reserve for adherence to regulatory guidance, accounting guidance and comparison to best practices in the industry. 

 

BOARD CREDIT REPORTING BEST PRACTICES ASSESSMENT SERVICES

DFRC can provide an evaluation of the current portfolio reports presented to the Board and its committees for consumer, commercial and real estate loans, and provide recommendations on improvements to enhance the efficiency and ability of Directors to fulfill their oversight responsibilities for credit risk management.  We can also provide Director training on best practices in risk management with particular attention to credit risk.