Current Expected Credit Loss

Expected Loss

Expected Loss is a recognized best practice that facilitates active portfolio management and rationally objective risk based pricing. Lenders that manage accurate Expected Loss are consistently more profitable and carry better business valuation through the credit cycle. The requirements of CECL do not represent a minor evolution in your reserve process. For most lenders, CECL will require a whole new infrastructure of data and analysis. PayNet believes, properly implemented, Expected Loss will revolutionize your risk management practices.

Download  Preparing for Current Expected Credit Loss - White Paper

Download Preparing for Current Expected Credit Loss - Abstract

Download Preparing for Current Expected Credit Loss - Executive Summary

View CECL Overview - Webinar

Probability of Default

Expected Loss requires empirically derived forecasts of the Probability of Default of each borrower in your portfolio. The question is how to create an accurate forecast with the limited loss experience available in your portfolio. PayNet delivers empirical data for your market footprint from the business cycles of the last decade. Furthermore, PayNet can provide you with the ultimate granularity of a distinct, quarterly calibrating, Probability of Default forecast for each borrower in your portfolio.

Download  Measuring Default Risk - White Paper

View Establishing and Maintaining the Probabilities of Default - Webinar

Exposure at Default

Expected Loss requires prudent estimates of Exposure at Default backed up by historical performance data. The conservative answer is that all available credit will have been accessed at the time of default so the challenge is to provide data that will allow a better estimate. Realistically, most banks either do not have that data or they do not have enough of it to provide a statistically meaningful answer. PayNet can provide data on prepayments on good loans as well as bad ones that corresponds to a similar business profile to support a position on EAD.

Download  Estimating Exposure at Default - White Paper

View Effectively Estimating Exposure at Default - Webinar

Loss Given Default

Expected Loss requires informed estimates of Loss Given Default that recognize not only the nature of the facility but the capability and practice of the lender. Estimates of Loss Given Default will have to be calibrated to the economic cycle just like Probability of Default. Financial institutions will need access to data that can provide the depth needed to persuade auditors and regulators of the most probable outcomes. PayNet can help you build and maintain cycle-calibrated Loss Given Default using our database of over 23 million commercial loan histories.

Download  Loss Given Default - White Paper

View CECL LGD: How Much is This Going to Cost? - Webinar

CECL in Business Planning, Strategy & Reporting

It is critical that the information and calculation required for CECL becomes a key element in the planning process, communication to management and the Board, and ongoing monitoring of the credit portfolio. The intent of this paper is to look at the new information that has or will become available for the revised accounting procedures and observe how this can and should be used by three important audiences: the Boards of Directors, the Chief Executive Officers and the Chief Risk Officers who have the same objectives to protect the shareholders from loss while at the same time manage the institution profitably.

Download   CECL: A Key Element in the Planning Process - White Paper

Download   CECL: A Key Element in the Planning Process - Executive Summary

View The Role of CECL in Business Planning, Strategy & Reporting - Webinar