Retail Credit Risk & Credit Scoring
This course begins with the notion of risk and risk management, be that everyday, finance, or consumer lending.
It will look at credit scoring, the most common set of techniques for managing and controlling consumer credit risk.
It considers a range of issues that impact on how we implement and use credit scoring in a consumer lending environment and also how we ensure it is successful in its management of risk.
What is Risk?
- Defining risk
- Exploring risks
- Exploring risks in banking and then in retail lending. Various risks will be discussed together with examples from a variety of banking and non-banking organizations.
- What credit products exist – and what are their implications for credit risk management?
- What channels do we use to process and manage the customers and the credit products?
The Credit Cycle and Principles of Credit Risk Management
- What is the credit cycle – and what are the key steps along its path
- What are the key principles of credit risk management?
- How is credit governed within lending organizations?
How do we lend money?
- What are the high level principles?
- What processes do we need?
- Traditional underwriting – its strengths and weaknesses
An Introduction to Credit Scoring
- What is credit scoring?
- Why do many lending institutions use it?
- Data and the types of data used to make a credit decision
- Sources of data
The Typical Scorecard Development Process
- What is the typical process? What are the key steps?
How long does it take and why?
- What does a scorecard look like?
Data Quality and Quantity
- Key aspects of data quality
- Why is data quality important?
- How do we drive data quality?
- How much data do we need to capture?
How are Scorecards Developed?
- What are the principles of the common methodologies?
- Reject Inference – what is it? Why do we have it? What are the options for it?
- How many scorecards do we need?
- How do we measure the strength of a scorecard?
- The key steps to take prior to using a new scorecard.
- Setting the scorecard cut-off
- Business implications of various strategies
Scorecard monitoring and tracking
- Ensuring that the scorecard is still appropriate for the target population
- Assessing if the scorecard is still working
- Over-rides and their management
- Credit policy
- Affordability checks
- Lending limits – customer and institution
- How to manage individual accounts - credit limit management, cross-selling, re-selling, and customer retention
- Scoring uses
- Collections and recoveries - principles, strategies, tactics
- Debt sale
- Use of scoring
Credit and Sales
- Risk based pricing
- Up-selling and down-selling
- Portfolio management and forecasting
Detection, prevention and analysis
Regulation – Basel
- Background and principles
- Impact on credit risk management
- Impact on the credit risk and credit governance processes
Bad Debt Provisions
- What are these?
- What rules apply to them?
- Key requirements
Designing and Recruiting a Credit Risk Management Team
- Roles and functions
- Recruitment and retention
Course fee: £4495+VAT
Certification / Credits
Attend this 4-day course / workshop and learn:
- About risk, risks in banking, risks in retail banking, and the credit cycle
- The process of scorecard building
- How scorecards are implemented and how to set the cut-off
- How scorecards are managed once in use
- The impacts of fraud on retail lending
- About the laws and regulations that apply to retail lending
- How to design and recruit your retail credit risk management team
Throughout the course there will be:
- Individual exercises, examples, and case studies
- Group exercises and case studies, in some of which each group will need to report their conclusions to the other groups
- Discussions, where participants are expected to participate
Why choose Euromoney Learning?
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80+ countries where training is delivered
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At Euromoney Learning, we understand that learning doesn’t start and end when you leave the classroom. We know that the financial markets never stand still, and that technology has both simplified and added complexity at a break-neck pace. That’s why...