Compliance risk assessments are the backbone of an effective compliance management system (“CMS”). They enable active risk management by identifying and measuring compliance risks both inherent and realized across the institution.  In addition, they inform monitoring and testing schedules, dictate the types and amounts of resources (both human and technological) allocated by the institution, and […]

(Originally published in ABA Risk and Compliance, July/August 2023) Bill Fair and Earl Isaac created the first modern credit scoring system, the Credit Application Scoring Algorithms, in 1958, and the first FICO score was introduced in 1989. Since then, the use of credit algorithms has become ubiquitous in the lending industry. These algorithms use statistical […]

(Originally published in ABA Risk and Compliance, November/December 2023) In lending, discretion can take several forms, including exceptions and overrides. An exception is an application whose outcome is not fully consistent with credit underwriting and pricing policies. The variation can be either in the underwriting outcome, or in loan terms and conditions, such as interest […]