Answer:
- Board and Management reports should be linked to Risk guidelines in policies (limits, buckets, etc.)
- Key indicators of performance, or potential problems and trends, should be monitored, for example, Credit Risk:
- Reports of new business, compared to Loan Policy guidelines
- Loans made as exceptions to Loan Policy (appraisal, limits, etc.)
- Concentrations of credit tied to policy
- Credit quality (e.g., delinquencies, classifieds, watch list) tied to policy
- Credit grades by loan review compared to officer grades (percentages/trends)
- Percentage of loan reviews completed
- Loan documentation exceptions
- Compliance with Covenants
- Consider both quantitative and qualitative measures
First published on BankersOnline.com 11/17/08
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