Back to Basics: Portfolio Management

by Stefani Wendel 2 min read January 13, 2021

Despite the constant narrative around “unprecedented times” and the “new normal,” if the current market volatility tells us anything, it’s to go back to basics. As financial institutions navigate COVID-19’s economic impact, and challenges that are likely to be different or more extreme than in the past, the best credit portfolio management practices are fundamental.

The global pandemic impacts today’s data as existing data and analytics may not accurately reflect what is happening now, resulting in inaccurate portfolio assessment. In order to successfully navigate loss forecasting, predicting borrower behavior and controlling loss ratios, lenders must engage new data, analytics and economic scenarios suited for today’s changing times.

In Experian’s latest white paper, “Credit Portfolio Management After the COVID-19 Recession,” we’ll explore best practices to combat the following challenges:

  • Forecasting credit losses despite increased economic volatility

Businesses have long used a variety of data, analytics and models to anticipate and project the future direction of their organization based on a number of data points; however, with the onset of the global pandemic, long-standing scenarios became suddenly irrelevant.

  • Predicting borrower behavior given increased financial disparities

The post-pandemic and pre-pandemic worlds are very different places for some borrowers. Pandemic-related job losses and other economic effects will not be spread evenly and this variability may be reflected in lenders’ portfolios.

  • Controlling loss ratios

In the post-COVID world, it will be mission critical for lenders to use high-quality and up-to-date data to balance priorities and identify which areas of their portfolio need attention now.

Whether your portfolio is doing better than expected, as expected, or worse than expected, now is the time to refresh portfolio management strategy. Lenders should be watching for early indicators in loan portfolios to better navigate a fluctuating economy and that requires new resources and better tools. Take control of your business’ trajectory.

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