Credit Risk Modeling & Dashboard Development

Engagement Period:  3 Months

Background

The client recognized the critical importance of advanced credit risk modeling and data visualization in enhancing their risk management capabilities. The existing credit risk models lacked sophistication and failed to provide a comprehensive view of default probabilities (PD), loss given default (LGD), and exposure at default (EAD). Additionally, the client faced challenges in effectively communicating credit risk insights to stakeholders. To address these issues, the client sought to develop advanced credit risk models and leverage Tableau's powerful visualization capabilities for improved decision-making, regulatory compliance, and transparent reporting.

Approach

Data Collection and Integration, Reporting and Disclosures, and Ongoing Monitoring and Maintenance were vital aspects of the engagement.  Initially, historical loan data, credit performance data, economic indicators, and relevant sources were collected and integrated into a centralized database for seamless analysis. Subsequently, the results of the model analysis were effectively visualized and incorporated into Tableau dashboards, ensuring transparency and comprehensive insights into estimation methods, key assumptions, and potential uncertainties. 

To maintain the model's accuracy and relevance, a robust monitoring process was established within Tableau, involving regular reviews and timely updates to reflect changes in the portfolio and economic conditions. 

Outcome

The successful implementation of advanced credit risk models for PD, LGD, and EAD, coupled with Tableau's interactive visualization, yielded transformative results for our client. The refined models provided a nuanced and accurate assessment of credit risk, empowering better-informed decision-making across the credit lifecycle. With optimized risk management practices, the institution efficiently allocated capital and proactively managed credit risk exposures. The Tableau visualizations enabled transparent reporting and facilitated compliance with regulatory requirements, enhancing the communication of credit risk insights to stakeholders. As a result, our client achieved improved financial performance and a strengthened market position, establishing themselves as a leading authority in effective and responsible credit risk management.