ALLL / PD/LGD

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PD/LGD

• Methodology

  Improving your ALLL methodology

  Bolstering risk management practices is a top concern for many bankers, and strengthening their ALLL methodology plays a big part in that effort. Probability of default/loss given default (PD/LGD) is widely recognized as a robust type of analysis for determining portfolio loss estimates.

• migration analysis

  Measures of Loss

  When calculating the FAS 5 portion of the ALLL, various methodologies can be used. These consist of peer analysis (for financial institutions that may still be in de novo status), historical loss, migration analysis and PD/LGD.