Credit Policy Development
Establishing strong front-end guidance
A well written and organized credit policy builds the credit philosophy and culture within your organization. It is the primary conduit in communicating the corporate credit priorities between the Board, Senior Management and your lending staff. It is more than just a list of do’s and don’ts. It is a critical tool aligning management, credit and sales to get them all on the same page, working together rather than having an adversarial relationship.
SRM has developed a risk management platform which structures your policy in two linking documents. The first is the Credit Policy reflecting the banks Credit Philosophy. This is the “Why we do what we do”. The second is the Credit Procedures, which is the “How we do what we do”.
PHILOSOPHY & procedure
The key is effectively merging the philosophy of “Why we do” with the procedures of “What we do”, and having both concepts congruent with the corporate credit priorities of your organization.
Many banks struggle with outdated policies which have been inconsistently added to over the years to become a contradictory mess. In many cases the policy does not need to be thrown out, but rather carefully re-written and updated to bring it back into alignment with the corporate credit priorities set by the board and senior management.
Development of successful policies tailored to your organization begins with a conversation with your board and senior management. From that meeting your policy and procedures can be built upon the foundation of the corporate credit priorities that are specific to your financial institution.