Portfolio-level Risk Management
16.1-16.3
16.1-16.3
When a risk team is asked to explain the changes of key portfolio-level risk metrics and attribute the changes to a few underlying factors.
What is risk attribution?
Always have one challenger strategy alongside the existing champion strategy in each major decision area.
What recommendation was made by Frank Tian in regards to strategy?
URL/transaction
What is the DataView service url?
$ Charge-off in last 12 months / Average balance in last 12 months"
What is the rolling 12-month $ charge-off rate calculation?
A customer service which successfully takes care of some basic inquires.
What is a chat bot?
-Industry trend
-A regional event, economic event or natural disaster
-Recent major portfolio initiatives
-Changes of specific products
What are typical factors which contribute to portfolio risk changes?
Annual credit strategy review
What is the recommendation of major credit strategy review?
A decision studio object which represents nested if statements
What is a segmentation?
Average $ gross CO balance / Average $ non-CO balance"
What is the good/bad $ ratio calculation?
Allows you to decide where you can expand credit further.
What is testing challenger strategies early on?
-Introduce origination campaigns via pre-qualified or cross-sell.
-Review opportunities to expand the authorization and proactive/reactive CLI campaigns
-Introduce invite-to-apply CLI campaigns
-Launch portfolio stimulation campaigns such as balance transfer and skip-a-payment
What are initiatives of loss mitigation?
The population wit ha behavior score <700 and FICO between 680-689 is assigned a call action on day 10, while the population with a behavior score >= 700 and FICO between 680 and 689 is assigned a call action on day 5.
What is an inconsistent collection strategy?
An error occurred when generating a filter or attribute from the request or response data. The error is located in in a field or generated variable script(pink text fields).
What is an Aggregation Error?
"There are several major types of charge-offs. These are usually the largest category, which occur due to the deterioration of the borrowers' credit. Other loss types include bankruptcy, deceased, and fraud."
What are Credit charge-offs or contractual charge-offs?
Recovery
Mid-Cycle
Late Cycle
Recession
What are different stages of a business cycle?
-Chronology Log
-Credit Policy
-Strategy Documentation
-Credit Strategies
-Change related Documentation
-Scorecard documentation
-Manual and Procedure
What are types of Documentation?
Another way to minimize strategy inconsistency i.e. inviting your risk colleagues from other decision areas to take a look at your strategy.
What is peer review or rotating risk staff?
Generates an XML document based on the current content of the GDS Record Viewer, specified in the first argument
What is the lua function AutomaticXMLGenerationForNode?
Important tools to monitor the effectiveness of collections
Roll rates can be calculated by # accounts or by $ balance. For the business team, the $ roll rate is more important, as it is closely tied to the portfolio's P&L.
What are Roll rate reports?
Some of these have been absorbed into the overall financial ecosystem via partnership with incumbents or direct acquisition
What are fintechs?
The presentation material related to a specific strategy change.
The approval of strategy change
Credit System Change request document
Testing records
What is Change-related Documentation?
-Monthly dollar gross charge-off
-Dollar gross charge-off rate, 12 month rolling
-Dollar gross charge off rate for the month annualized
-Dollar gross charge-off rate for the month, annualized, lagged for 6 or 12 months
-# charge-off rate, based on active or total accounts
- Reversal rate
- Monthly dollar recovery
- Monthly dollar recover rate, portfolio level
- Cumulative dollar recover rate, by charge off vintage
-bad/Good dollar ratio
What are type of charge-off and recovery reports?
The DV.log contains any error or warning messages.
What indicates a lua exception?
Lenders typically have a minimum credit bureau score and a minimum application score requirement in their origination strategies. There should be a report that lists approved applications below the minimum score cut-offs. This is also called a low side override report. Similarly, there is also a high side override report.
What are score override reports? pg. 248
A score developed by the three national credit reporting companies.