Crisis Risk

In times of uncertainty, identify vulnerability in your portfolio 

Managing risk in an ever-changing world

 

Traditional risk models are based on historical data, but in a rapidly-changing world, extrapolating from the past is an approach that is no longer fit for purpose. Events such as trade wars, pandemics, natural disasters and climate change are by their very nature situations that are hard to predict or plan for. We can make assumptions based on what we have seen with similar events in the past, but no two are the same, so any view of them needs to be supplemented with forward-looking data, which takes into account future challenges that may arise.

PI_Icons_Foward_Looking_View Look forward Understand future risks
PI_Icons_Real_Time_Data Re-run analysis Re-run scenarios on loans on a regular basis using new, real-time data
PI_Icons_Granular_Level Get granular Take into account the individuality of each business using sector-specific metrics

The pandemic proved banks need to rethink their methods and start using real-time data to avoid lending mistakes in turbulent and unpredictable times.

Look forward

Forward-looking data, such as projections of revenues, provide an additional means of understanding future risks. As these offer a glimpse of a possible outcome under certain assumptions, they can never be as accurate as historical numbers, but they do give banks and borrowers the opportunity to act with foresight. 

Re-run analysis

Every crisis is so different and ever-evolving that banks need to be able to re-run scenarios on loans on a regular basis, using new, real-time data as they receive it.

Get granular

Lending models need to provide an understanding of the portfolio at the granular-loan level, taking into account the individuality of each business and how metrics such as cashflow may be affected by a crisis. 

"As bankers, we know the clients you support in the tough times and during down cycles, often become your most loyal. So, OakNorth’s ability to help us gain clarity on the challenges our clients are facing and what level of support they need and when, is critical."

Daryl Moore
EVP, Chief Credit Executive at Old National Bank
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