All posts by David Binder

Risk & Compliance Will CECL Be a Plus or Minus for Your Competitive Position?

Starting line of race
Aug292017

Whenever there’s a major change in standards looming, companies subject to it understandably go into heads-down mode, focusing on what they need to do to become compliant. Often, there’s an enormous challenge just getting to the start line—the point where the change is required standard practice. For help with reaching the starting line for CECL, the new current expected credit loss impairment model in the US, check out FICO’s just-published CECL Hot Topics Q&A. My colleague Lynda Woodward and I answer questions such as: What is the biggest difference in the change from incurred loss to expected loss? What if we don’t have sufficient data to estimate lifetime losses? There’s a lot of talk about increased volatility in allowance estimates under both CECL and IFRS 9. What are the main causes? Are there some hidden implications of CECL for customer experience and relationship building that I should be considering early... [Read More]

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Risk & Compliance Don’t Let “Averages” Mess Up Your IFRS 9 Impact Forecasts

IFRS 9 as digital clock display
May292017

The clock is ticking on IFRS 9 compliance. Preparing for Day 1 IFRS 9 impacts before models are fully built, tested and validated is a bit like preparing for a scheduled car crash: You know the event is going to happen and you know it will be expensive and painful, but you don’t yet know the exact amount of damage. It is tempting to seek comfort in averages from industry benchmarks or surveys. But just as you would never apply the brakes of your car during heavy rain based on the average stopping distance of an average car in average weather conditions, neither should you plan for your business’s IFRS 9 impacts based on average industry impacts alone. Don’t Go by Published Numbers A few widely published, well-intended surveys have attempted to prepare affected organisations for this event by providing estimated ranges and averages in respect of key impact measures.... [Read More]

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