Portfolio Stress Test

Turn your required Portfolio Stress Test into an empowering experience

How many times have you heard the saying “the best defense is a good offense?” That saying couldn’t be more true when it comes to providing comfort regarding the composition and risk embedded within bank portfolios.

doug-tayor-commentToo often loan porfolios are judged based on the credit culture and practices of others, when they should be based on the specific attributes and characteristics of the customers that combined make up your portfolio. Many times, better than average historical performance is not enough.

A portfolio is simply the consolidation of customers, and these customers are a product of their complex layers of credit attributes. These customer characteristics
are usually referred to as layers of RISK. Within this classification, the term risk is intended to include weight for good or positive attributes equally with negative attributes.

The layering of these risks at the customer level allows you to:
• Support the strength of your portfolio
• Isolate, track and create appropriate strategies for high risk segments
• Increase profitable customer retention while having the tools to effectively provide comfort to regulators and other stakeholders that bank management understands the inherent risk and is doing the right things to manage it


Stress Testing produces diverse outcomes based on the nature and combination of these layers of risk. Stressing a portfolio amplifies negative performance characteristics while barely affecting loans that exhibit primarily positive ones.

Whether your bank has a portfolio of low-risk customers or isolated pockets of adversely high-risk, when you are able to prove that risk has been accurately identified and your strategies and practices appropriately address the inherent risk,
you feel empowered and can confidently go on the offense.

For a free consultation please contact us.

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