We consider credit to be the most critical risk that a financial institution faces. Our bottom-up credit loss estimates have three primary benefits:

1. Our credit loss estimates are fully compliant with the new Current Expected Credit Loss (“CECL”) Model.
2. Our credit loss estimates are based on the loan attributes and credit indicators lenders use to make loans, leading to better integration of lending and financial decision making, including risk-based pricing and Real Return Analyses.
3. Our credit loss estimates can be used to perform capital stress testing. Combining granular credit estimates with interest rate and liquidity risk modeling results in a thorough understanding of the primary balance sheet risks on an integrated basis, leading to better allocations of capital. See our Concentration Risk Management and Capital Stress Testing pages for more detail.