credit risk management + regulatory changes
The field of credit risk management is changing rapidly, and successful enterprises are those that are looking towards the future and anticipating changes in legislation and industry regulation. Those that gain the extra lead time that comes with having an ear to the ground enjoy more seamless transitions to new regulations, and have the ability to run comprehensive tests than ensure the effectiveness of their new workflows. This is a significant advantage, as revising an organizational approach to credit risk often involves many moving parts, and having the time and technology needed to make rapid changes can help strengthen client relationships and give institutions an edge over competitors.
It is also more than likely that the near future will bring more regulatory changes that will cause lenders to change their approach. A number of potential proposals were explored in the recent “Global Financial Services Risk Management Survey” from Deloitte Touche Tohmatsu Limited (DTTL).
The Basel Committee on Banking Supervision (BCBS), the recognized global standard-setter for the regulation of banks, is already considering making changes to its standardized approach for credit risk. A proposal submitted last year and still under consideration would “reduce the reliance on ratings by credit rating agencies, require more granularity and risk sensitivity, and provide more comparability with the internal ratings-based (IRB) approach for similar exposures,” the report read.
The Dodd Frank Act also represents a large question mark for the future of the industry. Originally passed in 2010, only a little over half of the 398 total required rulemakings have been finalized, while 23.6 percent have not even been presented yet. Progress is expected to continue to be slow, but each ruling has the potential to affect how an institution is allowed to operate.
Combined with an overarching global trend of increased regulation on the financial industry, institutions need the ability to quickly adjust to any relevant changes without inviting unnecessary risk. GDS Link’s modular credit scoring and customer management software means that you are quickly able to add the features you need, without adding to strained internal IT job queues. Our solutions can also be easily integrated with your legacy system, allowing you to rapidly adjust to regulatory changes while still seeing returns on initial investment.