Objective

The client set a series of related objectives:

• To set up an effective rating review function to evaluate corporate and structured lending investments and address matters requiring attention (MRA) issued by concerned regulators;
• To define the review scope for assessing and validating the adequacy and accuracy of the credit administration department’s rating assignments and ensure adherence to internal credit policies;
• To identify relevant trends that affect the quality of the investment portfolio and highlight segments that warrant immediate attention;
• To mitigate concerns of senior management and board of directors on portfolio credit quality and timely monitoring.

CRISIL's Solution

• Established a dedicated team with strong expertise in credit risk across multiple sectors, including corporates and structured lending instruments
• Defined the scope of the rating review to cover all segments of the investment portfolio and conducted the review through sample selection
• Conducted independent rating reviews with full ownership and documented procedures that effectively challenged internal rating assignment
• Established a system for continuous monitoring of the portfolio and gauging concentration risk
• Provided timely, objective and independent assessment reports to senior management on the overall quality of the portfolio and the impact of specific events on the portfolio
• Ensured compliance with internal rating guidelines and provided support to enhance the current rating framework

Client Impact

• Continuous monitoring of the portfolio and identification of risks that warrant immediate attention
• The new efficient review function provides an effective challenge to internal ratings and ensures timely action to minimise losses
• Excellent feedback from regulators for designing an effective review system; no new MRA issued
• An agile review approach to enhance coverage during credit events

Questions

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