Benefits of Segmentation in the ALLL & Risk Management

Jan 21, 2015

Sufficient segmentation is paramount in understanding an institution's portfolio performance. Properly segmenting the portfolio allows bankers to quickly identify underlying risk behaviors and make decisions based upon performance of segmented pools within the allowance calculation. What's more, as the ALLL evolves to an expected loss model, additional segmentation may be required. This whitepaper discusses why institutions segment the portfolio, gives an overview of best practices and highlights the benefits of proper segmentation.

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