Credit Risk Management

A key focus amongst the many regulations governing financial services businesses is capital adequacy. Charteris has rare experience of how to design, engineer and build a tailored Risk Appraisal and Management system enabling financial institutions to comply efficiently with key elements of the Basel II accord.

The market need

Long before the final agreement of Basel II in mid 2004, many financial services organisations were using risk modeling when deciding upon lending applications. These credit risk models, and the environment in which they are run, are key components of a credit risk management system. Systems must enable exposure and default probabilities to be calculated, as well as deals to be priced on a risk adjusted basis against specific hurdle rates.

In building these systems, many institutions prefer to develop integrated solutions that allow them to use proprietary models as well as on line models such as Moodys and Standard & Poors. Businesses do not wish to be forced to adopt only the models that come with "off the shelf" packages. Moreover, Credit Risk Management Solutions must be flexible and extensible to allow not only calculation of exposures and default probabilities in line with their Basel II requirements, but also to support full risk adjusted pricing.

The Charteris response

Through developing solutions for leading UK clearing banks, Charteris has the know-how to design and deliver a solution that:

  • Acts as a framework within which the client specific models can be accommodated – we recognise that clients' models must be retained.
  • Reflects the intrinsic business processes of the particular financial institution – we recognise that a "one size fits all" will not work.
  • Collates existing data to provide the information needed by key loan managers – we have unique capabilities in integrating across disparate data sources.
  • Presents this information in an intuitive way enabling better understanding and risk assessment – we specialise in usability and accessibility.
  • Maintains the integrity of data across all groups of staff – we have world class experience of building secure systems.

As Charteris combines understanding of the business and information requirements of credit risk management in providing these solutions we can be confident that what we deliver will:

  • Enable clients to satisfy the necessary capital adequacy regulations.
  • Improve the competitiveness of offering to their customers.
  • Enhance the effectiveness of risk monitoring and management.
  • Reduce the costs of the lending process, through increased efficiency of data collection.
  • Result in lower risk, faster and cheaper implementation.

To learn more about what we can do for you in this area please call Allan Barr, Head of our Financial Services Practice, on 020 7600 9199 (UK head office) or Roger Woods, Head of our Scotland and Northern England Practice, on 0131 477 7741 (Edinburgh office).