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ALLL / stress testing


stress testing

  • stress testing

    Credit Loss Modeling Services: COVID qualitative adjustments, Stress Testing, and CECL

    Activities from pricing, budgeting, allowance preparation, and stress testing depend on current and forward-looking expectations for the volume and timing of credit losses. Estimating losses in an environment that differs from recent historical experience in a consistent, quantitatively justified manner requires the use of some form of modeling approach. While the application of those models and underlying assumptions vary by activity, the model should still reflect the institution’s best estimate, and should not consider any reliable inputs “off-limits” during development.

    Poll

    What type of data do you anticipate leveraging for your CECL calculation?

    • 1-5 years of detailed loan level data
    • 5+ years of detailed loan level data
    • 1-5 years of aggregate (pool level) data
    • 5+ years of aggregate (pool level) data
    • I don't know the difference

    Tip Of The Day

    Currently the new CECL standard seeks calculations that make use of an institution’s “reasonably available” data. Starting to collect granular, loan-level data today will provide at least three years’ worth of good and useful data by implementation.

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