Neither the interbank information exchange system nor the credit history bureau is able to identify the risk of social default borrowers
However, not all market participants with optimism estimate the outlined boom on the cache credit and credit cards market. "Over the past three years, the product offer in the cache credits of all banks has changed - the amounts and terms of loans are growing steadily," comments Evgeny Thakevich. - Significant risks are concentrated here, because cache loans are most sensitive to social default and any economic shocks that are few predictable in the long run. " The concerns of the market participants cause both a tendency to reduce the gap between real incomes and expenditures of the population. According to the Ministry of Economic Development, in January - March 2012, the cash spending of the population exceeded incomes by 256 billion rubles, while the population used 80.5% of their cash income to consumption (for the same period last year, 78.6% were spent on these purposes). Against the background of the growth of the cost of utility fairs, this may lead to the fact that a part of borrowers using several credit products simultaneously cannot pay for their obligations in full. "The increasing flow of applications for cache credits comes from borrowers already having several existing loans to banks," Evgeny Thakevich agrees. - Most of them, the ratio of debt / income is already close to the critical level - 60%. " The presence of a small (even technical) delay in such a type of borrowers in the past should at least alert the bank - if there are several active loans at the same time, even a small salary delay can lead to the delay of all loans. As a result, during the periods of the economic recession, the retail portfolio can even be completely diversified by the number of borrowers and the size of loans may be irrevocated in a short time.
Of course, interaction with the Bureau of Credit Stories and the active development of interbank information exchange systems about borrowers is helpful for banks in assessing the risks of such borrowers. About 42% of the banks surveyed by the "expert" of banks already use the interbank information exchange, another 10% plan to introduce it until the end of 2012. According to our estimates, the share of credit applications for cache credits, requests for which were sent to BKI, on average increased by 15% in the first half of 2012 (compared to the same year a year earlier). However, neither the system of interbank information exchange nor the bureau of credit stories is not able to identify the risk of social default of borrowers, in which due to external circumstances a person decreases the income level. Yes, and the risk management systems of many banks do not take into account such risk on consumer loans, and also do not fully take into account the possible changes in the existing costs of potential borrowers in the future.
In addition, market participants noted that the further growth of retail at the expense of first-class borrowers has been exhausted. To maintain current profits, banks begin to gradually mitigate the requirements for borrowers. Consumer loan rates remain at the same level as a year earlier (see Chart 3). According to the survey of the expert RA, only a quarter of banks raised interest rates on consumer loans in the first half of 2012, while more than half said that the rates did not change either decreased. Until the end of 2012, 19% of the surveyed credit institutions plan to raise rates, there are no such plans in the third banks.
Chart 3. Weighted loan rates granted to individuals suffered minor changes for the year
Source: "Expert RA" according to the Bank of Russia
To preserve the current profitability, banks begin to gradually mitigate crediting conditions and requirements for potential borrowers. The need to grow business and maintain profitability will require access to new, more risky (and, as a result, even more profitable) segments that are "primary" microfinance organizations. Despite the presence of competitors, significant potential is concentrated here for banks. After all, MFIs, attracting significantly more expensive funding, simply will not be able to compete with banks at loans rates. However, the growth of the market by mitigating requirements in risk management systems - a risky model of retail development.
It is not surprising that excessive growth rates of non-tax consumer lending in individual banks cause concerns from the regulator. The Bank of Russia has already stated a special control of the activities of the most active players in the market, and next year, participants in the next year, participants may fall under the inspections of the main inspection of credit institutions.
Excessive growth rates of non-tax consumer lending causes concerns from the regulator.
Worried about the regulator and the interaction of banks with collectors, in particular the conditions for the reverse ransom of the assigned debts. If there is a doubt about the adequacy of the risk assessment on issued banks issued loans, a situation is possible, in which the quality of the assigned debts will be different from the assignation prescribed in the contract, in which case the bank will have to back to take out the defendants. And in the case of the adoption of the Act on Collector Activities, the transfer of bad debts "to the side" can be significantly complicated. "The law should give a legal assessment of this activity, regulate the relations of collectors and debtors, as well as solve the current legal conflicts relating to the protection of personal data, cessia, etc.," says Yuri Andersov. The final edition of the draft law is not yet ready. But the banks are most afraid of the introduction of a ban on the assignment of debt to third parties who do not have a banking license, as well as the requirements of the mandatory consent of borrowers to transfer debts to collectors. The introduction of such prohibitions may cause an increase in interest rates, which is further aggravated by the debt load of borrowers.
Another discussed innovation in consumer lending is the introduction of the so-called "cooling period". It is also able to have a significant impact on the growth rate of the market. The "cooling period" can potentially entail the growth of lending, since such an opportunity eliminates one of the deterrent factors for the consumer. If the client will know that he can return the money to the bank, without losing and not overpaying, he will be more willing to apply for loans, "Jury Andres comments. There are such innovations and the reverse side. "Cooling period" is very difficult to implement in IT-provision. Compassal technical improvements will be required, which, naturally, can affect the cost of loans, "said Evgeny Thakevich.
The time interval from the date of concluding a contract during which the borrower can return a loan without accrual interest and penalties.
UDC 339.378
E.A. Spivak
department of Commercial Policy, FGBOUTV "Russian University of Economics
A. F. Nikishin
cand. tehn Sciences, Associate Professor, Department of Commercial Policy, FGBOU VO "Russian University of Economics
them. G. V. Plekhanova, "Moscow
Commercial risks in modern trade
Annotation. The article discusses the main commercial risks in modern trade, as well as the main directions of minimizing their influence. Much attention is paid to the risks associated with the shipping and suppliers, business reputation and personnel of the trade organization.
Keywords: modern trade, retail, risks in trade, commercial
E.A. Spivak, Plekhanov Russian University Of Economics, Moscow
A.R. Nikishin, Plekhanov Russian University of Economics, Moscow
COMMERCIAL RISKS OF MODERN TRADE
ABSTRACT. In Article The Main Commercial Risks in Modern Trade, and Also The Main Directions of Minimization Of Their Influence Are Considered. Much Attention Is Paid to the Risks Connected with Merchandising and Suppliers, Business Reputation and Personnel of Trade Organization.
Keywords: Modern Trade, Retail Trade, Risks in Trade, Commercial Risks.
In modern conditions, commercial activities of trade organizations are associated with those or other risks that it is important to provide for its planning. At the same time, each trading organization may be inherent in certain specific risks. The problem of economic risks in trade organizations was considered in detail in the works of Berezhnaya Yu.V. , Lebedeva I.S. , Tyuby O.R. And others.
The risks associated with suppliers are largely influenced by the economic activity of trade organizations, largely determined by the financial instability of suppliers, poorly established personnel activities, the inability to ensure the necessary volumes of production, the quality of products being implemented, as well as a violation of contractual obligations. In some cases, there is a risk of additional competition when the supplier independently implements its products in retail format at discounted prices or when it provides its products for the sale of competing trade organizations. The implementation of risk data may result in lost profit, high costs, as well as a deterioration in reputation. To avoid such problems, it is necessary
carefully choose suppliers, studying their reputation and production capabilities. Also, an excellent way to reduce risks is to properly draw up a contract in which all possible problems and ways of their permission are prescribed. It is important not to focus on one supplier, but to look for possible alternatives and additions.
The trade activities are more pronounced than in the production, risks associated with the personnel of the organization are allocated. This is due to a large number of external relations, including direct contacts with buyers, which affects the reputation of the organization, as well as the existence of a commercial mystery. The reasons for the manifestation of risks are: low wages of workers of trading personnel, poorly developed motivation and training systems, high personnel turnover. The algorithm for reducing the degree of such risks is very similar to the algorithm for reducing risks associated with suppliers: a thorough check of candidates and drawing up a contract. The contract may be spelled out data and aspects of work, which are a commercial secret, and when checking candidates, it is necessary to accurately decide on the requirements and carefully consider the assessment. It is impossible to drain the option with psychological tests, because some people, due to their emotional characteristics, are not able to engage in certain types of activities: for example, a person with a melancholic type of temperament will be very difficult to sell sales. Since motivation and training is played for trafficking, motivation and training is played, it is worth the plan for monetary incentives for workers (for example, the dependence of remuneration from sales) and pay attention to training courses.
Also very significant are the risks associated with changing customer demand. This category includes the risks of decline in demand (for example, with a decrease in real incomes of the population due to the unstable political and economic situation in the state, during seasonal changes), the redistribution of demand (when changing fashion, prices for similar or related goods) and the risks of unexpected demand. Modern Internet technologies allow a careful demand analysis, given not only information directly about purchases, as well as based on search queries, directory page views and other user actions on the website of the trading organization.
In the modern world, intangible assets, in particular, business reputation have a great influence on the economic activities of trade organizations. The risk of loss of business reputation, as shown above, is associated with a variety of factors, in particular, the quality of the sold product range and service of buyers, which, in turn, includes both service of buyers in a stationary point and remote forms of trade. In this regard, important is the compliance of the range of goods presented on the organization's website, with its real availability in the trading network.
Each person has different from other knowledge and skills - this is the difference in the level of education, the ability to quickly and qualitatively find a solution in
foreseen situations, general vision and entrepreneurial activities. In this regard, you can allocate the risk associated with the personality of the entrepreneur. This determines the need to create an effective trading organization management system.
The entrepreneur is important not to forget about the risks associated with the shipping - these are the risks of reducing the quality of goods in the process of transportation, storage, installation. The magnitude of the likely damage includes the expenditures on liquidation, or the replacement of goods, a penalty, additional costs for transportation, storage, salary. There are also risks associated with buyers - this is a refusal of payment, the refusal of the goods itself and the delay in the acceptance of the goods. These risks are often associated with the work of the personnel and the quality of the product being implemented, but they must be allocated separately.
The probability of all the above risks can be significantly reduced, but there are risks of force majeure circumstances - unfavorable and dangerous natural phenomena caused by conscious or irrequisite activities of people. In order to minimize such risks, trading organizations can take advantage of insurance, diversifying their activities and other methods.
In conclusion, it should be noted that the risks have a great influence on the effectiveness of the economic activities of trade organizations. In the modern economy, there are a large number of ways to minimize such risks, including insurance, diversification, avoidance of risk and others. At the same time, the trade in the definitions are risks associated with suppliers, demand fluctuations, personnel, which has a great impact on the business reputation and effectiveness of economic activities.
Bibliography:
1. Berezhnaya Yu.V., Pankina T.V. Directions for increasing the competitiveness of trade organizations // Modern scientific research and innovation. 2016. № 2 (58). P. 437-439.
2. Lebedeva I.S. Actual issues of efficient business organization in retail // Bulletin of the Russian University of Economics. G.V. Plekhanov. 2010. № 5. P. 65-72
3. Tying O.R., Nikishin A.F. Risks in the economic activities of trade organizations // Collection of scientific works SWORLD. 2015. T. 18, No. 1. P. 60.
4. Krasikovina E.A. Grade: Management Systems in modern conditions // Development of the economy and entrepreneurship in the context of economic strategies of import substitution: Materials of the International. scientific study. conf .: Collection of scientific articles of teachers, graduate students and students / ed. IN AND. Malyshkov. 2015. P. 109-111.
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12. Ivanov G.G., Majorova E.A. Intangible assets in improving retail efficiency // Economy. Business. Banks. 2016. № 3 (16). P. 68-80.
In the process of functioning of the activities of commercial banks, risks are constantly and inevitably arise, which managers of the Bank are trying to resist or use in their favor (the latter is not always taken into account in scientific research and practical work).
By definition, O.I. Lavrushina, "The risk is the intended state of a particular object of reality as a result of the potential impact on the external and internal factors perceived by a person as possible sources of losses or benefits."
The risk management stage in the form of an analysis of the future state of a particular object of reality in order to identify the potential degree of its danger or the profitability of intuitive, scientific tools or other possible ways is the risk assessment procedure. A.V. Astakhov gives the determination of risk management as a way to identify "the degree of potential hazard and / or the profitability of a change in the object of reality, followed by the use of a protective action complex, including a complete refusal of possible benefits."
Modern trends in the field of operational risk talk about increasing attention to it from the Central Bank of the Russian Federation and commercial banks (residents and non-residents) present in the Russian banking market. The desire of the banking system to the recommendations of the International Institute regulating the general principles of the functioning of international financial institutions (Basel Committee) today forces banks to build an operating risk management system.
Specific elements of financial risk are inherent in different retail business segments. Due to the increase in the share of remote banking in the structure of retail business, and a higher risk, consider the position of some experts on this issue.
Identification and classification of risks inherent in the payment system, as well as its participants who experience the impact of these risks and generate them, are the basic elements of the payment system risk management mechanism.
Taking into account the specifics of the functioning of specialized payment systems Krivorucheko S.V. and Rodionov A.A. Allocate risks such as risk of medium and risk of calculations.
You can apply various types of mobile payments. For example, you can select risks that arise from delegation of a number of functions when conducting payments by third-party organizations to maintain the properties of the retail network.
They include main risks such as credit, operational, legal, liquidity and reputation loss, as well as the risk of using the money laundering system.
In addition to these risks, there is a risk of business, namely the likelihood of unsuccessful investment in the project of mobile payments by the bank or mobile operator.
The risk structure also includes the risks of numerous counterparties with which banks and mobile operators work. Identification of risks and appropriate measures to mitigate them will allow investment managers to take a positive decision on the start of the project.
Mobile paying risks also arise when making funds to pay from end-consumers in non-banking organizations (companies), which do not fall into the sphere of prudential banking regulation and supervision.
The risk is that the unlicensed, uncontrolled non-banking enterprise will attract funds from the population in exchange for electronic money and the possibility of either the embezzlement of these funds, or the use of them inappropriately, will lead to insolvency and impossibility to fulfill the obligations on customer requirements.
Credit risk in conducting mobile payments is manifested in the possibility of non-treatment (lacking) due to money from one of the parties in the financial transaction. Credit risk opportunities are multiplied if banking operations are not conducted online, and additional parties arise between the client and the bank.
For example, when the client makes money on a deposit through a retail agent, there is a danger that the operation will not reach the bank and the bill will not be driven. On the other hand, when the money is being written off from the account, the retail agent takes on credit risk, especially when the client uses a loan to pay bills through a mobile phone.
Operational risk in such systems is manifested in a wide variety of forms, including technical failures, theft of property with information and codes, fraud, errors. Also, in the case of the use of the agent network and cash transactions, the threat of robbery increases.
Legal risk is associated with the absence or non-compliance with the relevant standards, laws, contracts governing mobile payments, as well as their changes. The implementation of the projects on the organization of mobile payments is preceded by an analysis of the current regulatory framework, as well as the intentions of regulators and legislators to establish rules for such payments systems. Analysis of foreign regulation experience has shown that regulators or adapt the existing rules for the work of payment systems to new systems are either highly delayed at the stage of developing such acts. Therefore, there is a high uncertainty about the legal environment for this business.
The risk of liquidity is due to the fact that retail agents may not have sufficient cash amounts to meet customer removal requirements, and also do not have sufficient experience in managing financial flows.
In the event of problems, the retail agents may suffer and the reputation of the operator of the system and the bank may suffer. For example, inept customer service can affect the perception by consumers of all other project participants. Differences for the system of mobile payments will increase if cases of theft, errors, interruptions in providing cash networks of retail agents. Moreover, the failure of the project of one operator may undermine the credibility of the market to projects of other operators and banks.
In particular, the manufacturers of phones should provide an increased level of security to prevent the ability to embed funds with viruses or "Trojan horses".
Phone manufacturers, network operators and banks must match the Unified Model to identify the client. Network operators are called upon to provide low-cost communications for payment messages. Message standards should be developed and interfaces for sharing information between devices at sales points and mobile phones, between mobile phones and banking applications for payments.
Foreign experts recognize that the use of mobile phones as payment devices revealed the problem of the need to increase the technical complexity of these devices. In order to achieve the established work on conducting such payments, you should create or modify many applications to support the long chain of processes when performing the payment task. Therefore, banks, operators, manufacturers of mobile phones, terminals, sellers of goods and services need to update their equipment and applications to support mobile payments.
A significant obstacle for the development of mobile payments and mobile banking are unsolved issues in the field of security. Without solving these issues, mobile payments in most countries will still remain in the pilot project phase. It is significant that the efforts of encoders of codes in Internet banking are directly proportional to an increase in electronic payments. If today in mobile networks already exist viruses and they can easily spread, it is likely that the hackers will appear, "pressing" meager sums from millions of revolutions during mobile payments. But, on the other hand, the creation of additional and excessive protective barriers to the mobile network will reduce the convenience and simplicity for users, and will also increase the volume of investments of banks and operators per each income unit.
Safety is one of the barriers not only for widespread mobile payments, but also for the development of Internet banking. Such payments are initiated remotely without the possibility of physical identification of the client (user). The client must have a specific device or a security mechanism that can not use another person or who cannot be forged. It is known that not only personal computers, but also mobile phones can be subjected to a viral attack, as well as hacks and stealing codes in order to uncontrolled the account without the knowledge of the true owner. For this purpose, the active development of safety enhancement measures are continued, including the biometric identification of the individual.
Before all participants in the mobile payment market, it is necessary to solve the problem - how to achieve an optimal balance between security and convenience, between protection of private information and ease of use. A too high security will increase costs and reduce convenience, and too detailed information of a private nature will lead to the risk of abuse.
Thus, it is possible to summarize that it is precisely operating risks today represent the most serious problem for the banking sector.
At the moment, the category of risks comprising the above examples and the target name is "operational risk". However, today not only there is no single concept of definition, assessment and management of operational risk, but it is difficult to find any integrated and consistent approach to this problem.
Commercial bank "Sunja" LLC in its activities, in particular in retail business, to assess the level of operating risk management, use a whole set of factors. Taking into account these factors, various regulatory documents are developed, which is internal regulations for employees. The main conditions that the internal regulations must meet, this is:
the existence of an adequate, effective, communicated by the internal regulatory framework (provisions, procedures, etc.) regarding the management of an operating and technological risk, approved by the relevant bank bodies based on the principles of corporate governance, as well as relevant practices to fulfill its requirements;
the number and complexity of processing operations in comparison with the level of development and the capacity of operating and control systems, given the previous results of the work of these systems, their current state and the prospects for further improvement;
the likelihood of technological and operating failures, excess of powers by personnel, disadvantages in the preceding analysis of operations during decision-making, as well as the absence (including temporary) monitoring or registration of transactions with clients or counterparties;
the presence and compliance with the Bank of Technological Cards of Operations;
availability, quantity, causes and nature of violations of administrative and accounting procedures;
the potential financial loss opportunity, due to:
errors of performers or fraud;
low operating competitiveness of the bank;
inadequacy of available information systems;
incomplete information regarding the counterparty or operation;
operating and technological failures;
the history and nature of complaints and customer appeals to the Bank in connection with the disadvantages of the operations of operating systems and the reaction to them of the bank;
volumes and adequacy of controls for banking software and its accompaniment and other services that are carried out with the involvement of third parties (Outourcing);
the adequacy of the strategy regarding information technology, the strategy for information technology should meet the current and foreseen requirements regarding the Bank's activities and take into account the structure of technical equipment, telecommunications, software, data and networks, as well as the integrity of the information database.
As can be seen from the foregoing, banks should seriously refer to the problem of operational risk and a large amount of evaluation criteria should be determined to assess its level.
Based on the assessment of the adequacy of the above factors, as well as special assessment matrices, banking supervisors will be able not only to estimate the number of operational risk and the quality of management of them, but also to assess the trend in the level of operational risk in future periods.
Seminar program:
1. Risk management system in the bank
1.1. Classification of risks of the bank, determination of retail credit risks
1.2. Objectives and principles of bank risks
1.3. Objectives and principles of bank retail risks
1.4. The ratio of retail risks management objectives with the goals of the bank
1.5. Risk management methods
1.5.1. Refusal of risk
1.5.2. Risk Limit
1.5.3. Risk diversification
1.5.4. Hedge risk
1.5.5. Reservation of funds for projected losses
1.6. Organizational risk management structure
1.7. Separation of powers between the units involved in risk management
1.8. Decision making system
1.9. Interaction of divisions
1.10. Movement of employees of the Risk Management
2. Life cycle loan
2.1. Grocery line of the bank and the specificity of retail products
2.2. Credit life cycle concept
2.3. Risk management bank activity during life cycle
2.4. Retail Risk Management Efficiency Criteria at each stage of the life cycle
3. Data for managing retail credit risks
3.1. Intrabank data
3.2. External For Bank Data
4. Credit issuance: credit decision making system
4.1. Stages of making credit solutions
4.2. Automatic decision making system (CAD)
4.3. Manual decision making
4.4. Fraud prevention
4.5. Development and optimization of the decision-making system in the bank
4.6. Reporting
5. Credit portfolio management
5.1. Concept of portfolio risk management
5.2. Card Portfolio Limit Management
5.3. Reservation: RAS and IFRS
5.4. Budgeting taking into account the level of credit risk
5.5. Reporting
6. Collection of overdue debts
6.1. Influence of Collection on the bank's financial result
6.2. Stages of separated debt
6.3. Estimated debt collection strategies
6.4. Reporting
7. Organization of databases and use of information
7.1. Objectives of creating database
7.2. Unified or distributed database in the bank?
7.3. Replication and archiving
7.4. What bids and events to store?
7.5. Data specifics: Overdue counters
7.6. Requirements for retail database
8. Econometric and optimization data processing models in retail risks management
8.1. Scoring and non-object models: applications
8.2. Segmentation models
8.3. Forecast models
8.4. Optimization models
8.5. Types of scoring models: Application / Behavior
8.6. Methods for building scoring models
8.7. Selecting data for modeling
8.8. Quality assessment of models
8.9. Implementation of scoring models in risk management
8.10.Monitoring of the quality of scoring models
Credit risks associated with retail banking services are rather significant, but they have other dynamics compared to the credit risk of the commercial and investment banking industry. The determining characteristic of credit risks associated with retail banking services is that they are divided into small parts, so the default of one client is not so expensive by the bank.
Another basic characteristic reflects that retail clients are usually financially independent of each other. Corporate and commercial loan portfolios, on the contrary, are often associated with risk concentrations for corporations that are economically interrelated in specific geographical areas or industries.
Of course, banks with a retail portfolio, which is diversified by regions and products, have a significantly lower credit risk of concentration than those retailed portfolio of which is concentrated in a particular region or on a particular product. But in general, retail loan portfolios have a more pronounced tendency towards large and well-diversified portfolios than "heavy" portfolios of corporate loans. Retail banks, therefore, can better assess the percentage of loans in the portfolio for which in the future you can expect a default or loss. This expected loss value can be considered along with other costs in the process of the company's activities, such as expenses for maintaining branches or processing checks (and not considered as a threat to the financial stability of the Bank).
The high predictability of credit losses in retail lending means the following: The level of expected losses of the trust is the most important role in the rating assessment of retail risk and can be taken into account in the value that the client pays. Conversely, the risk of losses for most corporate loan portfolios and mainly lies in the fact that credit losses will significantly exceed the expected level.
Another key characteristic of many retail portfolios is that often about increasing the probability of default in advance signals the change in customer behavior, such as those who are under financial pressure and cannot make minimal payments on the credit card. For such warning signals, retail banks (and regulatory authorities) are closely followed. This allows banks to take certain actions to reduce credit risk. The bank may:
■ Change money management rules that are loan to existing customers to reduce risk:
■ Change marketing strategies and customer applications for attracting less risky customers;
■ Increase interest rates for a specific type of clients in respect of which there is a high probability of default.
Conversely, a corporate loan portfolio is something like a supertanker. To a certain point, it becomes clear that something is wrong, but it's too late to change something.
Regulatory authorities make an idea that the credit risk of the retail banking industry is relatively predicting (although a number of important exceptions are considered in block 9-2). As a result, retail banks will have to maintain a relatively low level of capital coverage in accordance with the new Basel Agreement, but compared with the current Basel Rules. However, banks must provide regulatory data on the probability of default (Probability of Default, PD) and loss in case of default (Loss Given Default, LGD), as well as risk exposure in case of default (EXPOSURE AT Default, EAD) for strictly differentiated portfolio segments . Regulators indicate that segmentation should be based on scoring models or equivalent indicators, as well as on vintage indicators (Vantage), i.e. time when the operation was reflected in the bank balance.
Block 9-2.
Has Pi Retail Credit Risk "Code of Medal"?
So far, we have discussed mainly how scoring models helps to determine the expected level of credit risk for retail portfolios. But in retail lending, there is a "reverse side" of the medal. This is the danger that losses will increase to an unforeseen level due to an unforeseen, but systematic risk factor, which affects the behavior of many loans in the Bank's retail portfolio.
The "reverse side" of risk management in retail banking services has four main components.
■ Not all innovative retail loan products may be associated with sufficient historical data on losses reflecting the level of possible risk.
■ Even well-predicted retail credit products may be changed unexpectedly under the influence of a sharp change in the economic environment, in particular, if all risk factors deteriorate at the same time (the so-called intention of extremely unfavorable circumstances), for example, in mortgage lending, the main concern is due to the fact that a strong decline in The economy is associated with high interest rates can lead to an increase in the risk of loans for loans and at the same time reduce the cost of security.
■ Client addiction to default (or absence) is the result of a complex combination of social and legislative systems that are constantly changing, for example, the social and legislative admissibility of individual bankruptcy, especially in the United States, is one of the factors that probably influenced the level of risk default of individual borrowers in the 1990s.
■ Any operational issues that affect the assessment of customer creditworthiness may have a systematic impact on the entire retail portfolio. Since the consumer loan is a semi-automatic decision-making process, not a series of special decisions, it is important that the credit process be developed and functioned correctly.
It is difficult to determine the magnitude of this risk, as it is badly projected. Instead, banks need to make sure that only a limited number of retail loan portfolios is particularly subject to new types of risks, such as sub-ended lending. Small Uncertainty exposure can open a profitable area of \u200b\u200bactivity and allow banks to collect enough information for better risk assessment in the future; A large exposure makes the bank hostage.
If large traditional portfolios, such as mortgage portfolios, are subject to a sharp change in a variety of risk factors, banks must use stress testing to determine how destructive can every possible most unfavorable scenario can be (see ch. 7).
Credit risk is not the only risk with which the retail banking sphere is faced. As is obvious from the material presented in block 9-3, this is the main financial risk found in most types of retail activities. Now we will consider the main tool for measuring retail credit risk: scoring models.
Block 9-3.
Other risks of retail banking
Above we focused on credit risk, the main form of retail credit activities. But, like commercial banking services, retail services are subject to various market, operating, business and reputational risks.
■ Percentage risk Created from both assets and obligations, whenever the bank offers specific rates, both for borrowers and depositors. This risk is generally transmitted from the retail of activities to the Treasury of the Retail Bank, where they are controlled through the management of asset and liabilities and the management of liquidity risk (see ch. 8).
■ Asset assessment risks - This is really a special form of market risk, in which the profitability of retail lending depends on the accuracy of the assessment of a particular asset, commitment or class of provision. The most important thing in mortgage lending is the risk of early repayment of the loan in the mortgage, the risk that the cost (value) of the portfolio of the mortgage loan pool can be reduced by reducing interest rates, since customers seek to pay existing mortgage loans as soon as possible, reducing their cost ( value). Evaluation and hedging of retail assets that are at risk of early repayment, a rather complicated process, as they are based on client behavior assumptions that are difficult to assess. Another example of risk assessment is to determine the residual value (value) of cars in the field of their lease (car leasing). If this type of risk is obvious, then it should be managed by a centrally treasury of the retail bank.
■ Office operating risks In the retail banking sphere, those divisions are mainly occupied, in whose activities these risks arise. An example is the introduction of new processes that track customer fraud in those situations where it is economically justified. In accordance with the new Basel Agreement, banks should also place regulatory capital on operational risk, both in the retail and in the commercial banking industry. An operating risk management department has appeared, which uses many concepts, such as operational risk at the level of the entire company (see ch. 13).
■ Business risks are the main reason for the concern of top managers. This includes the risk of business operations (for example, an increase and reduction of mortgage lending with increasing or decreased interest rates), strategic risks (for example, an increase in Internet banking or new payment systems) and solutions to mergers and acquisitions.
■ Reputational risks In particular, it is important in the field of retail lending. The bank must maintain his reputation, fulfilling the promise that he gave customers. But he should also maintain his reputation on regulatory authorities who can deprive the license bank if they believe that it acts unfairly or illegally.
- Nevertheless, there is a certain correlation associated with the state of the economy. - Note. translator.
