CRM Flashcards
What are the levels of governance in credit risk management?
The governance structure consists of four levels: Overall Governance, Board Level Committees, Bank Level Committees, and Independent Risk Management Unit.
What is the role of the Risk Oversight Committee?
The Risk Oversight Committee oversees the bank’s risk management program, ensuring alignment with the bank’s strategy and risk appetite.
What are the three levels of defense in risk management?
The three levels of defense include Business Units, Risk Management Team, and Internal Audit.
What is the Internal Credit Risk Rating System?
A systematic approach to assess borrowers’ creditworthiness using quantitative and qualitative factors.
What does the Portfolio Exposure Report measure?
It groups various risk metrics, such as industry exposure and asset quality, to measure overall risk.
What is the purpose of Limits Monitoring?
To cap exposures and prevent over-concentration in specific sectors or borrowers.
What is the classification system for loans?
Loans are classified into categories such as Pass, Watchlist, and Adverse to determine the appropriate level of allowance for credit losses.
What are the classification categories for loans?
The categories include PASS, PASS WATCHLIST, and ADVERSELY CLASSIFIED, each with specific characteristics.
What are the key characteristics of Substandard loans?
Weak financial condition, past due loans, and breach of covenants.
What characterizes Doubtful loans?
Severe weaknesses making collection highly improbable, with pending factors that could strengthen the asset.
What defines Loss loans?
Considered uncollectible or worthless, with little value remaining.
What drives changes in account classification?
Changes are driven by significant developments in the borrower’s financial situation or account performance.
What is the importance of client education in credit management?
It improves financial management and helps maintain good credit, preventing future classification issues.
What is the role of documentation in credit risk management?
Documentation is critical for securing loans and preventing defaults, impacting loan classification and recovery efforts.
What is the significance of compliance in credit risk management?
Compliance with legal requirements is essential for managing risk and enforcing rights, including foreclosure actions.
