Banks Need to Revisit CRO Compensation and Board Risk Committee Composition

The investigation into Wells Fargo’s community banking sales practices, including the role of risk management and the board in these practices, has many in search of questions of what could be learned to mitigate future breakdowns in the flow of information on emerging risk issues to key decision-makers. read more

Risk and Regulatory Insights: Reconciling Default Concepts for Risk Management Analytics

Various regulatory, accounting and portfolio management exercises require different credit loss estimates. This has created confusion in the industry over what measures of default to apply and how to produce them, resulting in the proliferation of multiple credit analytic tools within firms. This profoundly affects risk management activities as it has become more difficult to reconcile default estimates and communicate outcomes to decision makers. read more

Lessons in the Dynamics of Risk and Uncertainty

For some time, I have reflected on the dynamics of the firm decision-making process under imperfect information, contemplating how we, as risk managers, can improve our communication with boards and senior leaders — as well as identify the boundaries of our increasingly analytical-driven risk management processes. read more

Risk and Regulatory Insights: The Quest for Integrated Risk Analytics

Financial risk management has witnessed a revolution in advanced analytics over the last 20 years. New analytic techniques combined with quantum leaps in computing power provide risk managers with an array of tools to better measure and manage risks of various types. Integrating analytic capabilities offers great potential for risk managers and their firms; however, it remains an elusive goal for much of the financial industry. read more

Portfolio Analysis Case Study: Investment Banking Firm Licenses JWL to Overhaul Whole Loan Portfolio Analysis

The client, a U.S-based investment bank, wanted to leverage third party whole loan analytics for use within its fixed income management division.Ideally, the client wanted to be able to use one application to conduct end-to-end analytics for their residential loan portfolio. Five Bridges worked with the client and determined that the customization features offered in Javelin’s whole loan analytics platform, JWL, would offer the tools needed for the client’s project. read more

Pricing & Valuation Case Study: Large Nonbank Mortgage Aggregator Licenses Javelin Whole Loans (JWL) Platform for Pricing and Valuation Analysis

A large nonbank mortgage aggregator wanted to improve the granularity and accuracy of its pricing used for its QM-eligible correspondent lending activities. The current process was labor intensive and did not capture as many loan level risk attributes as it could. They were in need of a single platform that had the capability to perform valuations at loan- and portfolio levels quickly and accurately. read more

Profitability Case Study: Mortgage Portfolio Operation Leverages JWL to Assess the Ongoing Profitability of its Business

A mortgage portfolio lender was interested in upgrading its P&L process by leveraging the Javelin Whole Loan (JWL) Platform. The solution required integration with the existing profitability system used by the firm but tying in the JWL’s suite of analytic models that accurately assess the competing risks of credit and interest rate risk simultaneously across the bank’s varied mortgage products. read more

Pricing & Valuation Case Study: Large Nonbank Mortgage Aggregator Leverages Javelin Whole Loan (JWL) Platform for Pricing and Valuation Analysis

A large nonbank mortgage aggregator wanted to improve the granularity and accuracy of its pricing used for its QM-eligible correspondent lending activities. The current process was labor intensive and did not capture as many loan level risk attributes as it could. read more

Debt Restructuring/Loan Modification Case Study: Licensing JWL to a U.S G-SIB

The client, the mortgage servicing division of a major U.S. bank holding company, needed to meet regulatory requirements set forth by the FHFA in the Home Affordable Refinance Program (HARP). The client was in need of whole loan analytics tool to forecast the risk associated with the loan modification program for their residential mortgage servicing portfolio of $50+ billion. The desired tool needed to be sufficiently flexible to handle loan valuation at multiple levels of granularity, as well as be adaptable to the existing process. read more