Systems Designed for Commercial Lending Portfolios

Risk measurement and reporting is essential to provide a clear view of the current and possible future situations, allowing effective business strategies and policies to be implemented to manage future losses. Banks often have risk management techniques and models in place for standard assets like retail and commercial loans; however, they are not so surefooted with the tools needed for more complex credit transactions such as commercial real estate in which small changes in structure make a significant difference in the risk.

Risk Integrated’s Specialized Finance System (SFS) is broadly used in three purposes. One is the collection of data on individual prospective and live transactions to give senior management a detailed view of the portfolio. The second purpose is grading and assessing Basel capital at origination. The third purpose is running portfolio analyses such as stress tests and economic capital. In this case, rather than having hundreds of users, just a handful of portfolio management experts use the SFS to run their detailed analyses.

Banks in Europe and the United States have turned to Risk Integrated’s Specialized Finance System for a clearer view of their future when managing commercial lending portfolios. In their highly regulated industry, banks must show examiners that good portfolio management systems are in place to monitor their concentrations in complex CRE assets.