RALEIGH, N.C.—Sageworks, which provides lending, credit risk and portfolio risk solutions to banks and credit unions, shared a re-cap of its 2016 Risk Management Summit. Held this year on Sept. 14-16th in Austin, Texas, the Summit is the annual, premier conference covering the allowance for loan and lease losses (ALLL) and stress testing for bank and credit union professionals.
With the recent release of the Financial Accounting Standards Board’s (FASB) guidance on the Current Expected Credit Loss (CECL) model, the Summit this year was uniquely positioned to provide the latest information on how institutions can prepare for the changes and what the impact may be upon implementation. The agenda featured risk management experts including executives from the American Bankers Association, top accounting firms KPMG, Crowe Horwath, Grant Thornton and CliftonLarsonAllen, as well as consulting firms Promontory Financial Group and SMARTER risk management. Additionally, bestselling author and change management expert Tom Morris, Ph.D. delivered the keynote address for the Summit.
“From bankers at both banks and credit unions across the country, we have heard that maintaining a defensible and compliant ALLL can be a challenge, and the CECL model will only make it more complicated,” said Sageworks CEO Scott Oglc in a statement.. “Since the FASB standard was only recently released, we were excited about the timing of the Summit and how it become a strategic opportunity for attendees to learn about CECL and next steps according to the experts.”
The 2016 Risk Management Summit presented by Sageworks featured a diverse mix of sessions on loan-portfolio management. Key takeaways include:
- Key considerations for CECL implementation committees including events such as acquisitions or capital investments that could impact an institution’s effective date
- CECL methodology considerations including potential segmentation changes due to differing risk profiles over the life of the loan
- A framework for model risk management with tips on identifying and scoring model risk as well as planning for model validation
- Examples of measurement approaches in an expected loss estimate including cohort, vintage and adjusted annual loss rate methods
- Current trends and expectations around stress testing such as incorporating stress test results into the institution’s budget and financial forecast
- The role an Enterprise Risk Management framework can and should play at community banks to systematically identify and react to risks that pose a threat
For the complete list of lessons learned on CECL and loan portfolio risk management, visit http://web.sageworks.com/2016-summit-takeaways/.