The Risk Management Association (RMA) and Automated Financial Systems, Inc. (AFS) released the results of their joint survey on enterprise data to support credit risk management. A total of 80 global institutions, headquartered in North America, Europe, Africa, Australia, and Asia, completed the survey.
One clear outcome from the current credit crisis is the lack of consistent quality in credit data. Moreover, a key finding from the survey was the lack of a clearly defined goal or strategy to achieve credit data quality. Without a clearcut standard of achievement, the consequences (intended and unintended) continue to manifest themselves on a tactical and seemingly random fashion. Some of these relate to appropriate capital allocation, unprecedented volatility in risk assessments, probability of default and loss given default estimations, amount of credit outstanding versus committed exposures, and an overall lack of confidence by executive management in the quality and level of reporting, both internally and externally.
The detailed report findings are now available. They describe the current state of credit risk management architecture and clearly detail the most prevalent methods, tools, and decision processes used to determine leading practices.