Retail Credit Risk Management

This is a two-day course to introduce and develop the ideas of retail credit risk and in particular credit scoring

Who should attend?

… the many people in lending and other organisations who need to gain an understanding of what credit scoring is, what it can do, and how it works. They are likely to be in the credit risk function and could be working in scorecard development, scorecard monitoring and tracking, scorecard implementation, liaison with the lending operations, management information, validation and governance, scorecard strategy, management, etc.

Why should they attend?

Credit scoring is now the most common means of banks and other lenders making consumer lending decisions. This workshop explores the basics of how credit scoring works in a modern consumer lending business – the processes, the strategy, and the decisions. While there is a brief practical excursion into how the scorecards are built, the focus is on what the scorecards look like and how they need to be used and managed. The workshop is non-technical, aimed at the business useror strategist and requiring only some basic numeracy skills, such as being able to calculate percentages.

By the end of this workshop, participants will:

• Be able to understand what credit scoring is and why it is used
• Have been introduced to the typical scorecard development process and timings and what a credit scorecard looks like
• Have discussed a range of related data issues
• Be aware of a range of issues to do with managing and using the scorecard, ensuring that it is operating well and is being used compliantly
• Understand some of the issues in setting the scorecard cut-off
• Have an appreciation of what is required to achieve Basel compliance
• Appreciate some of the challenges of risk based pricing and up-selling and down-selling

Delivery of the course is through formal lecture, classroom discussion, individual exercises,and group exercises and with lots of real examples.

Course Content:

Day 1

Risk

• What risk do we run?
• What are the risks in banking?
• What are the risks in retail credit?

Background to Credit Scoring

• How do we lend money?
• What is credit scoring?
• Why do we use credit scoring?

Scorecard development

• What is the typical process?
• What are the key steps?
• What does a completed scorecard look like?

Data Quality and Data Quantity

• Data accuracy
• Missing data
• Stability
• Fraud detection and prevention
• How much data do we need?

Scorecard Implementation

• Pre-implementation checks
• Cut-off strategy
• Post-implementation reviews

Day 2

Monitoring, Tracking and Validation of scorecards

• Application profile monitoring
• Account performance tracking
• Scorecard validation

Over-ride Management

• Definitions of over-rides
• Reasons for over-rides
• Processing of over-rides
• Analysis of over-rides

Risk Based Pricing

• What is risk based pricing and how does it work?
• What are the implications on the processes, the data, and the people?

Up-Selling and Down-Selling

• Principles and objectives of up-selling and down-selling
• Credit challenges

Credit Scoring across the Credit Cycle

• Differences in scorecard development
• Operational differences

Managing Scorecard
Developments

• Roles and responsibilities in a scorecard development
• Ideas on how to manage the development

Introduction to Basel

• Background to Basel
• Definitions
• Some consequences for data, validation
• Stress testing
• Low default portfolios

Delivering this course in-house for you to a number of participants could be very cost effective. Please call us on 020 7387 4484 to discuss this further.

If you have any questions about this seminar please write to us at post@redcliffetraining.co.uk.