Certificate In Retail Credit Risk Management And Control From credit quality assessment for new applicants and existing accounts to performance evaluation and management for credit, lending and collections decisions Fully revised and updated
20 – 23 October 2013 • Jumeirah Emirates Towers Hotel, Dubai, UAE
Top Learning Outcomes Delegates gain a working knowledge of how the credit and collections, credit risk assessment and scoring processes are implemented at in-house, commercial and/or governmental credit bureaus. You will also be able to assess the credit worthiness of retail/commercial credit applicants and Accounts Receivables (A/Rs) using commercial credit rating and credit scores, which also includes small business lending decision making and management. 4. Gain knowledge of best practice for credit and 1. Learn best practice and current approaches for retail collections risk management, control and mitigation credit risk scoring, credit quality assessment, fair for reducing costs and minimising unexpected losses lending best practices and undertaking credit granting from retail credit and collections exposures process for new and existing customers 2. Acquire capabilities for developing, implementing and sustaining effective cost-wise A/R and collections management strategies
5. Develop familiarity with fraud detection and preventions strategies, fraud scoring techniques, and reporting fraudulent activities
6. Apply common metrics used in assessing effectiveness 3. Improving efficiency and effectiveness for A/R and performance of credit and collections procedures screening and management process and management for doubtful accounts, delinquencies, disputes and 7. Become aware of the retail credit risk transfer write-offs techniques and credit loss protection techniques
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The George Washington University School of Business, IIR Middle East’s Academic Partner, is dedicated to excellence: in its teaching and research about management, in the public and private sectors, within the United States and internationally. The school has a 75 year history of preparing men and women for leadership in both the public and private sectors. Known internationally for its dedication to academic excellence, the school draws students from all parts of the United States and around the world. Beyond first class teaching and scholarship, the school’s faculty offers practical experience in the issues and challenges confronting business and government. Its research centres link faculty and students with US and international business and government organisations. Recent distance learning initiatives have expanded the school’s global reach.
Course Requirements And Certificates Delegates must meet two criteria to be eligible for an IIRME/GW Certificate of Completion for a course: 1. Satisfactory attendance – delegates must attend all sessions of the course. Delegates who miss more than 2 hours of the course sessions will not be eligible to sit the course exam 2. Successful completion of the course assessment Delegates who do not meet these criteria will receive an IIRME Certificate of Attendance. If delegates have not attended all sessions, the Certificate will clearly state the number of hours attended.
Who Should Attend?
Enterprises and individuals seeking to operate retail, commercial and/or personal credit and credit lines; those offering retail, commercial small business and/or personal credit-granting decisions; those involved in lending, credit, payments and collections policy making; commercial and in-house credit scorecard developers and users; those involved in credit risk management and control functions, and credit risk compliance and regulatory authorities; including the following: • Credit Risk Management Group Head and Credit Risk Analysts • Credit Lending Officers, Loan Origination Officers and Underwriters • Chief Risk Officer and Enterprise Risk Managers • Accounts Receivables Management Officers • Retail and Small Business Lending Portfolio Managers • Billing, Collections and Payments Managers • Internal and External Auditors • Credit Sales, Marketing and Trade Personnel • Compliance and Regulatory Officers and Authorities
T: +971 4 335 2437
F: +971 4 335 2438
About Your Expert Course Leader Dr. John W. Dalle Molle is an independent financial market consultant specialising in quantitative credit, energy, market and operational risk management, analytics and modelling. Recently, he has been involved in model validation consulting projects with major Singaporean and Malaysian banks. He has presented executive educational and professional training programmes in Africa, the Americas, Asia-Pacific Region, South Asia, the Middle East, and various European countries. His clients include several large financial institutions and central banks. In the past, he has also taught at a number of renowned universities in Asia, Europe, and the Americas. Dr. Dalle Molle has also made several professional presentations around the world at conferences and exhibitions.
Course Introduction The course presents fundamentals, objectives and procedures for assessing and evaluating credit quality exposures, creditworthiness and credit granting decisions for various retail and consumer credit functions, including small business lending. These credit quality exposures are associated with both new credit applicants and existing customers with accounts receivables and/or clients desiring new credit lines of extension of current credit lines. The course also presents credit risk assessment techniques for procedures for behavioral and applicant scoring for consumer and retail accounts, the policies and procedures underlying the granting credit functions, Accounts Receivables (A/Rs) management, and other risk management and control policies and procedures required to efficiently and effectively mitigate and manage retail and consumer credit and loan portfolios. Collection strategies and collection management procedures are presented for the manangement of credit exposures inherent to accounts receviables.
Would you like to run this course in-house?
The in-house training division of IIR Middle East Tel: +971 4 407 2624 • Email: CTS@iirme.com www.iirme.com/cts
W: www.iirme.com/retailriskmanagement
Certificate In Retail Credit Risk Management And Control 20 – 23 October 2013 • Jumeirah Emirates Towers Hotel, Dubai, UAE Course Timings: Registration and coffee will be at 07.30 on Day One. Each day will commence at 08.00 and conclude at 14.30. There will be two refreshment breaks at approximately 10:30 and 12:30 and lunch will be served at the end of each day’s sessions SECTION 2: Retail/Consumer Credit Policies And Procedures
Course Description The course presents current and best practice for retail/consumer credit quality assessment, retail/consumer lending and Account Receivables (A/Rs) management, and collections policies and strategies for retail/ consumer credit portfolios. Specifically, the course content offers discussions on the following various issues: • Consider best practice for screening new applicants and reassessing existing clients and other types of credit applicants • Learn procedures for classifying and discriminating decisions for determining “good” and “bad” applications • Investigate the phases to collections process and effectiveness and performance metrics for credit and collections • Become familiar with commonly used credit scoring systems • Investigate processes for selecting appropriate credit terms, setting limits for credit purchases and reducing bad-debt write-offs
• Credit granting decision policy formulation – goals and objectives, mission statements, credit policies and procedures, and the credit procedures manual • Gathering credit-quality data and developing credit information data registries • Credit lending policies specifications, profit margins, and debt-burden analysis SECTION 3: Risks And Factors Consideration In Retail/Consumer Credit Quality Assessment – I • Characteristics, lending policies and credit reports for retail/commercial credit granting processes • Retail/consumer credit risks and factors used in evaluating borrower’s creditworthiness and loan riskiness • Using retail/consumer credit reports and commercial credit reporting agencies to evaluate consumer credit quality
• Procedures are detailed for managing Account Receivables (A/Rs) and collections, and establishing terms of sale, payment conditions, and payment deadlines • Issues are addressed concerning assessing credit quality, forecasting credit loss exposures and evaluating credit granting decisions • Focus on current takes on fraud detection tools, fraud prevention strategies, fraud-scoring techniques and procedures for reporting fraudulent activities • Analyse credit risk assessment for retail credit exposures from Basel II/ III perspectives
Pre-requisites Delegates should have some background in consumer and/or retail lending functions. Some knowledge of credit risk management and control fundamentals, Excel and a basic knowledge of statistics and probability would be useful.
Course Outline
Day One SECTION 1: Credit, Lending, And Collection In Retail/Consumer Credit Functions • Retail/consumer credit categories – consumer loans, small and medium business, real estate lending, trade and mortgages • Seven C’s of granding credit: capital, capability, character circumstances collateral coverage, and compliance • Credit risk for retail, consumer and trade credit – comparisons • Credit risk factors for small and medium businesses – characteristics of borrowers, lenders and loans
SECTION 4: Risks And Factors For Consideration In Retail/ Consumer Credit Quality Assessment – II • • • •
Screening “through-the-door” credit applicants Credit lending decision – accepting/rejecting loan applicants Credit score overrides and manual referrals and interventions policies Selecting appropriate credit terms and offering appropriate terms of sale • Account Receivables (A/Rs) management, establish terms of sale, payment conditions, and payment deadlines • Establishing international credit terms through assessing additional assurance requirements for foreign customers
Day Two Retail/Consumer Credit Scoring – I • Credit scoring foundations – classification and discrimination • Credit scoring, credit quality factors and other credit risk indicators • Defining cut-off scores for “good,” “bad,” “false good” and “false bad” • Consumer credit decision-making process - policies for separating/ discriminating between “good” and “bad” customers • Aging of “good” and “bad” percentages in account cohorts/vintages Exhibit – Credit scorecard examples for predicting credit quality and credit line extensions Exhibit – Examples of credit scorecards for consumer lending SECTION 5: Retail/Consumer Credit Scoring – II • Examples of different scores used in consumer/retail lending, including: - Application scores (or credit application scores) - Attrition scores
T: +971 4 335 2437 F: +971 4 335 2438 E: register@iirme.com W: www.iirme.com/retailriskmanagement
- Authorisation scores - Behavioral scores (or Accounts Receivables scores) - Recovery scores - Counterparty risk scores - Customer/mail solicitation scores • Credit scoring for small business lending • Misspecification, error rates and limitations of scoring methodologies Exhibit – Score ranges and desirability classifications for FICO scores and VantageScores Exhibit – Commercial scoring products - FICO scores and VantageScores for small businesses Data requirements, sample selection and calibration for scoring assessments SECTION 6: Assessing Credit Quality, Forecasting Credit Loss Exposures And Performance Evaluation For Small Business Credit Granting Decisions • Financial ratio analysis for small business credit quality and failure prediction • Commonly used credit scoring models using financial information, including: 1. Credit matrix credit scoring system 2. Z-score model for measuring financial stability of larger companies 3. H-score model for measuring financial health of small companies 4. Ohlson’s Logit model for discriminating between good and bad credits SECTION 7: Analysis For Retail/Consumer Credit Decision-Making Process • • • •
Portfolio analysis for credit quality assessment and lending decisions Managing credit decisions – champion versus challenger strategies Credit score stability and back testing score-based credit rating systems Applicant reject inference analysis – objectives and methodologies
Day Three
SECTION 10: Retail Credit Risk Management And Control – I • Common unsound practices affecting retail credit performance • Retail credit risk management – reducing exposures versus eliminating losses • Polices for collection and payment monitoring, setting credit limits and formulated credit loss provision levels • Lending decisions performance tracking/monitoring, controlling delinquencies and minimising unexpected doubtful accounts surprises • Basel II and III issues and requirements related to retail credit function SECTION 11: Retail Credit Risk Management And Control – II • Credit insurance, Letters of Credit (L/Cs), financial guaranties, and securitisation for retail credit transactions • Accounts Receivables (A/Rs) factoring, factoring risks, and loss control • Managing customer relationships and limiting losses on marginal accounts • FOREX considerations for managing international retail credit lending and collections functions • Centralisation of retail credit granting and risk management functions
Day Four SECTION 12: Effectiveness And Performance Metrics For Retail Credit Risk And Collections Functions • • • • • • • • •
SECTION 13: Protecting Against Fraudulent Retail Credit Activities – I
SECTION 8: Retail Credit Scorecard Performance Management Reports • Scorecard management reports, interpreting policy rules and procedural assessment reports • Various examples of front-end scorecard development reports • Various examples of back-end scorecard performance reports SECTION 9: Credit And Collections Departments – Procedures And Polices • Best collection’s practice and strategies and the collector’s role • Debt collection and delinquent customer collection guidelines • Amending and managing common debt collection miscalculations and oversights • Policies designed to reduce bad-debt write-offs for collection programmes Exhibit – Phases to collections process and possible actionable responses
Average Collection Period (ACP) Days Sales Outstanding (DSO) for Accounts Receivables (A/Rs) Tracking changes in Days Sales Outstanding (DSO) Collection Effectiveness Index (CEI) Percentage of previous month’s past Due A/R collections in current month Various average days for holding inventory metrics Days Delinquent Sales Outstanding (DDSO) for A/Rs Changes in Days Delinquent Sales Outstanding (DDSO) for A/Rs Bad debt write-offs as a percentage of sales
• • • •
Retail credit fraud – common schemes and related fraud statistics Red flags indicating suspicious activities and potential presence of fraud Credit fraud detection and loss prevention techniques Detecting and protecting against credit fraud – phishing, hijacking, skimming, carding, ID theft, and account takeovers SECTION 14: Protecting Against Fraudulent Retail Credit Activities – II
• Know Your Customer (KYC) due diligence and customer identity verification • Fraud detection tools, prevention strategies, fraud scoring techniques, and reporting fraudulent activities • Policies and red flags for detecting and preventing retail credit fraud • COSO’s integrated framework for fraud control and monitoring Exhibit – The fraud triangle – motive (or pressure), rationalisation (or attitude) and opportunity Exhibit –Famous examples of identity thieves
T: +971 4 335 2437 F: +971 4 335 2438 E: register@iirme.com W: www.iirme.com/retailriskmanagement
Certificate In Retail Credit Risk Management And Control 20 – 23 October 2013 • Jumeirah Emirates Towers Hotel, Dubai, UAE FIVE WAYS TO REGISTER IIR Holdings Ltd. P.O Box 9428 Dubai, UAE
+971 4 335 2437 +971 4 335 2438 register@iirme.com
www.iirme.com/retailriskmanagement
DISCOUNTS AVAILABLE FOR 2 OR MORE PEOPLE CALL – +971 4 335 2483 E-MAIL – a.watts@iirme.com WEB BC4979 Event
Course Fee Before 4 August 2013
Course Fee Before 25 August 2013
Final Fee
US$ 3,895
US$ 4,395
US$ 4,695
Certificate In Retail Credit Risk Management And Control 20 – 23 October 2013
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Course fees include documentation, luncheon and refreshments. Delegates who attend all sessions and successfully complete the course assessment will receive an IIRME/GW Certificate of Completion.
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