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Credit risk: How loan portfolio stress testing can help your institution now

Mar 03, 2021

Are you thinking about how and when the current health crisis will impact your loan portfolio, your earnings and your capital position? Do you continue to see warnings and have concerns regarding increasing credit risk as a result of the COVID-19 pandemic? Don’t worry, you are not alone!

The implementation of company-run loan portfolio stress tests was a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Actfor all FDIC-supervised banks and savings associations with at least $10 billion in total consolidated assets. Dodd-Frank Act Stress Testing (DFAST) was enacted in 2010. If your financial institution is not in one of the $10 billion or more categories, the mandate does not apply. 

However, regulators have been concerned about these strategic issues and have tried to influence financial institutions toward a more forward-looking approach to risk assessment. Whether you currently utilize a model or assess qualitative or market factors on your own, understanding the areas of lending that pose the greatest risk to the institution will help you navigate the uncharted waters of our pandemic and post-pandemic worlds. Listen to this informative webinar as we outline the importance of stress testing on a portfolio basis, including:

  • COVID-19’s impact on the economy and credit risk.
  • The regulatory guidance governing stress testing.
  • How stress testing improves risk management and strategic decision making.
  • How to utilize the results of your stress testing to ensure appropriate capital adequacy and liquidity management.
  • Resource list
  • And more!

This webinar was designed for: President/CEO, Chief Credit Officer, Chief Risk Officer, Chief Financial Officer, Loan Review, Internal Audit and other lending positions.

Author(s)

Janeen Bradshaw
Manager
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Karen A. Mitchell
Senior Manager, Risk Advisory Services
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Cynthia Brzeski, CPA, CRC
Manager
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