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How do economic changes impact consumer risk?
Lenders require new analytics to gauge how dynamic market conditions affect risk By Dr. Andrew Jennings, FICO Chief Research Officer. As the banking industry tries to grasp the lessons of the financial crisis, what stands out is a harsh reminder of the dynamic nature of risk. While lenders only saw moderate change in portfolio risk during years of relative economic stability, in the past year, they have observed major shifts as economic conditions worsened. The industry was caught unprepared and failed to take timely actions to correct for the impact of the economy and changing lending practices.