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Post-Covid19 credit risk modeling and thirsty crows: Preparing for the day after

//Post-Covid19 credit risk modeling and thirsty crows: Preparing for the day after

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Post-Covid19 credit risk modeling and thirsty crows: Preparing for the day after

Post-Covid19 credit risk modeling and thirsty crows: Preparing for the day after

An old folktale tells the story of a thirsty crow, who found water at the bottom of a bucket, and couldn’t reach it with the tip of his beak. He added pebbles to the bucket until the water level rose enough that he could drink. Necessity has always been the mother of invention.
The world will change. It already has. It will leave everyone bruised in some way, and everyone will have to deal with new challenges, or with old ones with a twist. Doing post-Covid19 credit risk things the “pre-Corona” way just won’t cut it. If you’re a credit risk professional, you’ll see an upsurge in demand for credit, and you’ll need to ensure you’re able to assess risk in a way that matches the new world conditions. 

Why your “beak” alone won’t cut it: 

  • You will have to make tough decisions, like never before. Well, maybe not “never”, but probably not since the 2008 crisis. With many more credit seekers, you’ll need to be extra-certain that you are taking exactly the risk you can afford. But your model can’t give you the clarity you need. That’s because… 
  • Your model doesn’t know the post-Corona world yet. If you’re assessing credit for a business in an industry that was a booming one until two months ago, and is now struggling, your model just doesn’t take it into account. Why not? See my next point.
  • Most credit risk departments don’t update their models often enough. For most credit risk departments, updating the model is a real hassle. It requires a hard-to-track paper trail of the last person who updated it, The model book isn’t updated automatically and the approval process for the next version can take months. 

So where does that leave you? With a need for invention. Or even better – innovation. Yes, this is the time to ensure you have the best tools to make the right calls in the post-Covid19 credit risk reality, that will be agile enough to adapt to the rapidly changing reality. And while your model already has a smart AI-based engine, if that engine isn’t updated often enough, it won’t be enough. 

Here’s what the “pebbles” you bring to the bucket need to have to help you quench your thirst for accurate credit risk assessments:

  • An auto-fill for your model book to make the update as easy and fast as possible.
  • A user paper trail at the click of a button to easily find the last person who updated the model
  • A version update process that meets regulatory requirements and takes a fraction of the time to get approved vs. your current model

The EyeOnRisk Platform enables all of this and more. Because we know that the crow that doesn’t get inventive, stays thirsty. And in a post-pandemic world, this is something you can’t afford.

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