Effective Credit Process

Transcription

1 Effective Process GARP2012 Thirteenth Annual Risk Management Convention February New York NY Presented by President, A Risk Advisory and Risk Consulting Firm

2 What is an Effective Risk Process An Effective Risk Process is a: series of clear and specific tasks taken in tight sequence to achieve a defined goal with measurable results and continual feedback for improvement. A Process is NOT a Strategy. A Process is NOT a Procedure. GARP February

3 Characteristics of an Effective Risk Process Aligns with Business Objective Aligns with Enterprise Risk Adapts Anticipates Change Has Measurable Results Provides Feedback to Risk Strategy Provides Feedback to Business Objective Protects Enterprise Value GARP February

4 Factors that Influence an Effective Risk Process Attributes of Process - Guadi Project Philosophy Lean Principles Value Creation to Delivery Tightness of Process Flow from Request to Delivery People and Systems that Complement Process Monitoring and Early Warning Corrective Steps Enterprise-wide Respect for Process GARP February

5 Factors that Influence an Effective Risk Process Process Attributes Purpose is the business objective clear Structure are the business & credit strategy clear Rationale Is the reasoning clearly understood Roles the right people and tools Task Sequence are the procedures clear GARP February Source: Gerrit Muller, What is Process Beskerud University College, The Netherlands, version1: July

6 Factors that Influence an Effective Risk Process Lean Principles Identify Value: timely feedback - best interest of customer Value Stream Map: clear upfront expectations / resources Process Flow: people, procedures and systems Customer Pull: adapt credit process to foster enterprise value Seek Perfection: Re-evaluate credit process periodically GARP February Source: Lean Enterprise Institute website, Principles of Lean, February

7 Factors that Influence an Effective Risk Process Lean Principles - Macro Flow Chart Business Environment Business Strategy Strategy Feedback Process Procedures Product Delivery GARP February

8 Factors that Influence an Effective Risk Process Lean Principles: Micro Flow Chart Business Strategy Strategy Client/Transaction Evaluation Process Client Perception Of Enterprise Value Accurate assessment of opportunities relative to capital capacity GARP February

9 Factors that Influence an Effective Risk Process Lean Principles: Enterprise Internal Process Process Improvement Feedback Request Documentation Analysis Decision Feedback to Requestor Monitoring Exit Strategy Team Focus on Timeliness and Enterprise Value GARP February

10 Factors that Influence an Effective Risk Process Drivers of Enterprise Value People Process Enterprise Value Systems GARP February

11 Factors that Influence an Effective Risk Process People and Systems that Complement Process Talent with Growth Opportunity Within the Enterprise Diverse to Improve Robustness of Thought Process Character, Competence and Teamwork Feedback Must be Immediate and Frequent Environment Must Encourage Participation Robust Quantitative and Qualitative Tools Relevant Staff Training GARP February

12 Summary Effective Process is Fundamental to Enterprise Value An Effective Process Sustains Value Results in Teamwork and Fertile New Ideas Noticed by Clients and Competitors Constantly Improves and Regenerates Itself Works Across Cultural Boundaries Enjoys Respect of the Enterprise GARP February

13 What an Effective Process is NOT: Process Addiction GARP February Source: Software Engineering Institute, Carnegie Mellon: Process and Procedure Definition: A primer, SEPG 2007-March 2007, pg4.