Risk Management Models: Forging a New Approach

Wednesday, July 16, 2008
Mandarin Oriental
New York

Banks, mortgage providers, and other consumer lenders have commented publicly over the past year about how their risk management models did not account for either the dramatic changes in housing and credit market, or for the declines in consumer confidence and borrowing activities related to the real estate slump and overall economic downturn. But, as financial institutions look to the future and try to determine how to avoid repeating the mistakes and missteps of the recent past, there are a number of difficult questions to be resolved:

• Were the credit risk management models incorrect to start with?
• Were the models too reliant on past trends?
• Did they not perform as anticipated but were validated statistically?
• Were quantitative analysis shops behind on model updates due to outdated processes, or lack of access to accurate data?
• What needs to change, in terms of the models, the processes, the skills sets, the tools, all or none of the above, to help banks avoid future lending meltdowns?

We will discuss the "new" challenges involved in developing and maintaining credit risk models that will allow banks not only to survive the current credit environment, but also allow banks to provide key insights into portfolio trends and customer behaviors – specifically, what will be the practices required in either providing credit to a new applicant or rescoring a current customer and what is the forthcoming regulatory impact? Additionally, we will explore "new" definitions of risk within a retail/consumer or mortgage lending operation.

* Event sponsor reserves the right to qualify and deny any interested party.