The Importance of Quantitative Analysis and Granularity in Risk Rating Systems: A Series

Even in the best of times, the efficacy of a credit risk ratings systems is central to every bank’s performance. Put simply, a risk ratings system is key to the entire lifecycle of a loan—from decisioning, to possible sale and/or syndication, to forbearance and workout, if necessary—and to the assessment and performance of the overall portfolio.

These are not the best of times.

The COVID-19 economic crisis has put unprecedented stress on borrowers across industries and ge…