WHAT DOES A CREDIT RISK MANAGER DO?
Published: September 11, 2024 - The Credit Risk Manager develops and maintains a robust credit risk framework to align with Group business requirements and regulatory compliance. Oversees daily credit control measures, evaluates portfolio performance, and implements underwriting policies to mitigate risks. Proactively identifies threats and prepares credit loss projections to safeguard company profitability while providing ongoing support and reporting to management.
A Review of Professional Skills and Functions for Credit Risk Manager
1. Credit Risk Manager Duties
- Credit Strategy Definition: Work with the leadership team to define credit risk strategy.
- Portfolio Monitoring: Monitor the existing portfolio to ensure credit risk is in line with the company's risk appetite.
- Risk Mitigation: Identify risk drivers and propose mitigation solutions.
- Policy Maintenance: Maintain and update credit policy documents.
- Policy Testing: Propose tests to improve the credit policy and support business growth.
- Product Collaboration: Collaborate with R&D and Product functions on the testing and launch of new products.
- Reserve Calculation Oversight: Oversee the monthly reserve calculations and support CECL reporting.
- Team Leadership: Lead a team of credit risk analysts.
- Risk Leadership: Provide leadership presence to the broader Fintech Risk team.
2. Credit Risk Manager Details
- Credit Assessment: End-to-end credit risk assessment and approval covering Corporate and Commercial financing.
- Policy Enhancement: Assist the credit team in enhancing policy and procedures.
- Governance Management: Manage and assist governance and packs for country and board risk committees.
- Stress Testing: Assist with completion of stress testing on a periodic basis.
- Risk Management Support: Support the Chief Risk Officer in managing the bank's credit risk by conducting credit initiatives adhering to local and regional regulations.
- Collections Collaboration: Work with the collections team to ensure goals and targets are met with limits continuously reviewed.
- Portfolio Monitoring: Monitor portfolio performance.
- Risk Appetite Management: Manage risk appetite to support business decision-making by implementing new initiatives and policies.
- Stakeholder Management: Manage direct credit reports and internal stakeholders.
3. Credit Risk Manager Responsibilities
- LoD Oversight: Oversee and challenge 1st Line of Defense (LoD) commercial business activities.
- Risk Escalation: Monitor and escalate material credit risks and control issues to internal committees.
- Risk Cycle Execution: Execute risk management cycle for credit risk as per the policy and risk appetite.
- Policy Input: Provide input to policy documents and ensure risk governance complies with regulatory requirements (e.g. EBA/ECB guidance).
- Stress Testing: Undertake credit stress testing and offer perspective on its strategic implications for the lending portfolio.
- Regulatory Adherence: Support the bank’s adherence to regulatory requirements and expectations, especially regarding Internal Capital Adequacy Assessment (ICAAP), the Recovery Plan, and the Risk Appetite Statement (RAS).
- Model Ownership: Act as a local model owner for credit risk models.
- Data Source Evaluation: Contribute to the evaluation of adequacy and effectiveness of credit data sources.
- Stakeholder Management: Manage stakeholders internally and externally.
4. Credit Risk Manager Accountabilities
- Analytical Projects: Lead a range of analytical projects for the team, shaping the delivery to support business growth objectives with a focus on delivering high-quality decisions for customers driven by data.
- Result Integrity: Be accountable for the integrity and accuracy of delivered results.
- Risk Management: Set control framework, run the credit portfolios against agreed performance indicators, and effectively communicate the level of risk we’re taking.
- Project Prioritization: Prioritise and plan projects, delegating effectively to develop team members, while handling and challenging requests for unplanned or ad-hoc work.
- Strategic Communication: Clearly communicate proposals to gain consensus for strategy changes from partners across the organisation.
- Team Supervision: Supervise the quality of the analysts' work, ensuring they adopt best practices and share knowledge effectively.
- Vision Support: Positively support the vision and strategy of the department, working with the Senior Leadership Team to engage and empower team members.
- Regulatory Compliance: Maintain compliance with regulation.
- Policy Challenge: Challenge established policy and procedures where appropriate, and suggest alternatives.
5. Credit Risk Manager Functions
- Policy Monitoring: Establish and monitor policies and procedures that will foster the company’s potential to meet its sales and risk management goals.
- Risk Limit Setting: Work with Head Office in establishing relevant risk limits and monitor risk exposures.
- Issue Resolution: Actively support efforts to identify credit risk-related issues and coordinate issue resolution management.
- Credit Investigation: Conduct complex credit investigations and analyze diverse credit information on multifamily loans through financial, sponsor, market, property, and management analysis.
- Portfolio Analysis: Perform analysis and evaluation of the credit portfolio, including loan classification, credit concentration risk analysis, etc.
- Data Analysis: Analyze, develop, and interpret the data from risk systems, including NPL, credit costs, RWA, making comparable analyses and liaising with Business Units for courses of action.
- Control Implementation: Implement controls and processes to ensure adherence to policies and guidelines.
- Audit Tracking: Follow-up and maintain tracking of open audit and self-identified credit risk issues to ensure satisfactory closure.
- Impact Assessment: Evaluate changes in policy and regulatory requirements and conduct impact assessments.
6. Credit Risk Manager Job Description
- Risk Framework Development: Develop and maintain the credit risk framework to ensure it complies with Group business requirements.
- Risk Project Participation: Participate in ad hoc credit risk projects to manage credit risk, concentration risk, and counterparty credit risk.
- Risk Exposure Measurement: Responsible for the implementation of counterparty credit risk exposure measurement and daily credit control measures.
- Credit Support: Provide ongoing credit risk-related support and monitoring, perform consistent portfolio reviews on asset quality, and identify any early warning signals.
- Portfolio Monitoring: Proactively monitor Institutes and Sovereigns across regions, ensuring appropriate management of deteriorating conditions in the portfolio and the factors influencing these circumstances.
- Underwriting Policies: Develop and implement underwriting policies and procedures that help reduce the organization’s credit risk.
- Risk Evaluation: Identify and evaluate threats, and develop alternative courses of action to avoid, reduce, or transfer credit risk.
- Credit Loss Projection: Prepare credit loss projections to predict credit risk exposure to the company’s profitability or existence.
- Performance Reporting: Arrange and oversee the preparation of performance reports for management.
- Regulatory Compliance: Ensure ongoing compliance with regulatory requirements.
7. Credit Risk Manager Overview
- Risk Training: Serve as a resource and provide training & support to Division finance and sales leaders regarding risk identification, risk ratings, and bankruptcy matters.
- Team Development: Provide training, mentoring, and development support to direct reports.
- Cross-Divisional Leadership: Provide leadership to drive cross-divisional coordination and collaboration in managing high-risk accounts.
- Account Evaluation: Lead the Analyst team in the evaluation of NA customer accounts and development of risk mitigation plans.
- Collection Team Guidance: Guide and support Credit Services collection team associates regarding high-risk customer situations.
- Bankruptcy Support: Provide leadership and guidance to division sales and finance teams amidst bankruptcy proceedings.
- Risk Monitoring Toolset: Create and maintain a toolset for monitoring risk, including AR performance reporting for Ecolab customers, external reporting sources (D&B, Credit Risk Monitor), and industry networking to capture information related to risk.
- Customer Monitoring: Perform continuous information monitoring related to the largest customers.
- Credit Policy Formulation: Formulate credit policy and work with the collections teams and division finance to enforce it.
- Stakeholder Relationships: Develop relationships and meet with divisional & corporate contacts periodically to communicate about Ecolab high-risk customers.
8. Credit Risk Manager Tasks
- Customer Negotiation: Collaborate and negotiate with customers to identify and mitigate high-risk situations (parent guaranty, security interest, reduced terms).
- Legal Coordination: Work with external counsel and placement agents regarding bankrupt and high-risk or delinquent account procedures.
- Credit Worthiness Assessment: Oversee and assess customer credit worthiness using various methods such as financial statement analysis, D&B, and Credit Risk Monitor to assign credit limits and risk ratings.
- Credit Extension Decisions: Drive credit extension discussions/decisions in collaboration with Customer, CAF, divisional Field Sales, Finance, and/or divisional General Managers in high-risk situations.
- Payment Term Evaluation: Evaluate extended payment term requests to maximize cash flow and minimize credit risk.
- Risk Mitigation Monitoring: Monitor and modify NA risk mitigation efforts in tandem with customer and industry risk volatility.
- Bankrupt Customer Evaluation: Evaluate bankrupt customers, set terms/limits, and coordinate with Legal regarding claims and preference demands.
- Bad Debt Reserve: Complete monthly Nalco bad debt reserve by CECL and communicate rate changes with divisional finance leadership.
- Contract Review: Review customer contracts and add risk mitigation language and tactics.
9. Credit Risk Manager Roles
- Portfolio Analysis: Oversee and manage the monthly and quarterly analysis of the portfolio and own end-to-end reporting process.
- Risk Governance Documentation: Manage risk governance documentation including credit policies and procedures, and document changes to processes, procedures, and documents.
- Vendor Coordination: Work closely with external vendors, CRAs, data providers, and consultants, ensuring all projects are closely coordinated with key stakeholders: engineering, product, and marketing/CRM teams.
- Model Documentation: Manage credit risk model and decision strategy documentation, validation reports, performance outputs, and processes.
- Stakeholder Management: Work with various stakeholders both inside Zip and external partners to get strategies reviewed, reported, and approved.
- Regulatory Liaison: Liaise with compliance, finance, and internal and external auditors for regulatory and reporting needs.
- Risk Strategy Communication: Work closely with risk and data analysts and the analytics team to drive the risk strategy and communicate findings effectively to cross-functional partners.
- Underwriting Review: Review credit underwriting process by closely evaluating the model's current methodology, assumptions, implementation, controls, and documentation.
10. Credit Risk Manager Additional Details
- Proposal Review: Review, analyze, and disposition new business proposals and credit policy proposals.
- Policy Challenge: Review and challenge BL credit policies, standards, and procedures.
- Risk Evaluation: Critically evaluate and credibly challenge BL proposals, including projected origination volume and associated credit loss assumptions, to ensure the best possible outcome for Ally.
- Team Leadership: Lead staff in the disposition and documentation of reviewed proposals.
- Trend Evaluation: Evaluate and stay current on both industry and Ally consumer credit trends to inform approval decisions.
- Credit Risk Insight: Engage with the broader IRM Credit Risk team to offer insight into credit risk reporting trends and provide input to the Monitoring and Testing Team.
- Risk Routine Participation: Actively participate in business line risk routines to ensure thorough and up-to-date knowledge of the business.
- Risk Advisory: Leverage an independent view of risks to influence business decisions, serve as a trusted advisor to the business, and be an ambassador for Credit Risk.
- Executive Presentation: Draft executive-level presentations to communicate conclusions and recommendations to all levels of management.
- Risk Exposure Advisory: Advise management on the suitability of risk exposures relative to the Risk Appetite Statement and risk limits.
- Risk Identification: Independently identify, assess, measure, mitigate, control, monitor, test, report, and escalate risks, including aggregated risks across the enterprise.
Relevant Information