PRMIA member profile - Michelle Allade By Adam Lindquist

PRMIA member profile - Michelle Allade

by Adam Lindquist PRMIA Director of Membership

Interview with Michelle Allade, a very active PRMIA volunteer as well as a respected risk professional. Her insights in this issue of Intelligent Risk are helpful for risk managers across the globe.

Adam

Tell us about your risk role?

I work as the Bank Model Risk Officer of Comenity Bank and Comenity Capital Banks (“the Banks”) which partner with more than 145 of the most respected retailers in the world, to provide credit cards to more than 50 million members. Michelle

I am responsible for ensuring sound decision-making processes within the Banks by certifying that models used for decision making are reliable and well understood from the perspective of their assumptions and limitations. This leads to ongoing model improvements and ultimately the ability to react quickly to changes. My role is essential within the risk organization as models are leveraged across all facets of the Banks and are getting more complex with the adoption of Artificial Intelligence and Machine Learning.

In my current function, I lead a team that manages the risk inherent to the use of model within risk management functions such as market and liquidity, credit and counterparty, operational, portfolio, and financial risks (i.e. capital forecasting and stress testing) and compliance as well as other critical business functions such as Pricing, Finance, and Marketing. The breadth of exposure allows me to drive alignment in assumptions used across models and break down silos in the decision-making process.

Adam

How did you get interested in risk?

I stumbled into risk management after getting a bachelor’s degree in finance and economics. I landed a job as a research analyst for an insurance company where my main duty was to identify clients that fit the company risk appetite within its agencies’ book of business. This piqued my interest, and I decided to get a masters within the field of risk management. Michelle

Adam

How is your bank addressing COVID-19 virus concerns?

Employee safety and customers’ well-being are the primary concerns at our bank. As such, most of the associates are currently working remotely, and multiple measures have been taken to help customers who are experiencing financial difficulties caused by the COVID-19 pandemic. Michelle

From a risk management perspective, key actions have also been taken, including targeted analyses to better understand our risks along with prudent and timely actions to mitigate the downside of a potential global recession and ensure continuity of our operations. In addition, reporting of our risk metrics is communicated more frequently as we monitor the pandemic situation closely.

Adam

How do you think this will affect businesses in the future?

Unfortunately, the immediate effect of the pandemic is already visible with businesses reducing their workforce and taking a conservative approach by reducing risk exposure and drawing down credit lines. Financial institutions encouraged by regulators have been quick to offer forbearance options to consumers. Some institutions, based on expectation of upcoming recession and even prior to the COVID-19 outbreak, had already started cleaning up their portfolio of non-performing assets, adjusting credit policies and ensuring that they are well positioned from a credit, liquidity and capital standpoint.

Michelle

From a consumer perspective, I expect a shift in overall credit quality as impacted consumers reduce monthly payments, utilize COVID-19 forbearance options offered by many institutions, increase credit line utilization, open new credit lines and slowly experiment score deterioration as a result. For consumers that are not yet impacted, I suspect a decrease in monthly payment as consumers attempt to increase their savings in the event of a job loss. I will also expect a decrease in overall discretionary spending and a boost in essential and discount-driven industries.

Another point worth mentioning is that financial institutions should incorporate the financial impact of healthcare to the average consumer that ends up requiring a trip to the ER amid of all this uncertainty.

There is a lot of uncertainty around the length and severity of the impact with prediction changing rapidly. Regardless of the financial impact, COVID-19 will impact the way organizations operate, improve contingency planning, and highlight weaknesses in rigid practices.

Adam

What advice would you give to students thinking about a career in risk?

A career in risk is very rewarding. I would say to focus on building strong foundation and expertise at the initial stage of the career. Once the expertise is developed, a risk professional should understand how his or her role fits in the overall business process and the knowledge needed to impact changes. I would recommend model risk as a specific area because of the diversity of the exposure that this field offers. In order to reap the benefits from a career in model risk, students should prioritize consulting firms or smaller financial institutions. Big Banks tend to confine roles to a very narrow type of models which limit the learning opportunity for recent graduates.

Michelle

Michelle

In my opinion, the top three skills for effective risk managers are:

1.

2.

3.

Technical skills: quantitative or analytical, information technology skills

Business knowledge: domain or function specific understanding to drive the most value from the technical skills

Communication skills: critical to share outcome of risk assessment for decision making process and building relationship needed to drive change.

You are a very active PRMIA volunteer. Why did you decide to volunteer, and what have you learned from the experience?

Adam

I chose to volunteer with PRMIA because I believe in the mission of the organization. I also believe that each of us have multiple talents that cannot all be leveraged by our day job. For me, volunteering with PRMIA to help drive membership by reinforcing its value proposition allowed me think outside the box and drive strategic initiatives. Through volunteering, I have learned that PRMIA members have diverse backgrounds and are making an impact in the world of risk management.

Michelle

Adam

Where do you see yourself in five years?

I would like to leverage my experience in risk to enable better strategies and execution at the enterprise level. The field of strategic risk management, which is the risk that failed business decisions, or lack thereof, may pose to a company, is definitely an area I can see myself in. My current role prepares me for such role with the focus on emerging risk and the cross-functional requirement of managing risk. Strategic risk management as a discipline is an area that needs further attention and adoption across the industry.

Michelle

author

Adam Lindquist

Adam Lindquist is the Director of Membership for PRMIA. His career background includes vertical integration disruption as a regional manager in banking, business development resulting in a 5-year run as fastest growing specialty retailer, and many entrepreneurial ventures.

Michelle Allade

Michelle is a risk analytics leader with financial services experience focusing on Model Risk Management (MRM). She currently leads the Model Risk Management program of Comenity and Comenity Capital Banks. She previously worked as consultant at KPMG where she helped various financial institutions (small, medium and large), implement and maintain robust model risk management programs. Michelle has specific experience building MRM programs from the ground up and optimizing processes of existing programs. She also led the development, validation and audit of various models within the stress testing space. Michelle’s primary focus is to optimize enterprise-wide decision-making process through the lens of model risk. She is currently working on cross-functional governance for Artificial Intelligence models.

Michelle has two Bachelors of Business Administration in Economics and Finance and a Master of Science in Mathematical Risk Management from Georgia State University.