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Credit Relationship Management

Business Issue - Migration analysis shows that initially good loans are being charged off in as little as 18 to 24 months. How can relationship managers become more proactive to prevent seemingly “overnight” failures? Our research shows relationship managers spend 15 percent or less of their time in customer contacts that could lead to business development. How can they become better, more effective business developers without sacrificing critical risk management time and activities?

Your organization has downsized, set a rigorous new credit culture in place and hammered home your message on credit quality. Now, how do you get relationship managers to “turn on the tap” and become active in the market again? You and your relationship managers need to be able to do more with less time and fewer resources while continuing to manage risk and build a competitively defensible business.

Omega Performance’s Solution - Typical migration analysis shows that the longer a loan stays on the books before becoming a problem, the more likely the initial credit decision was a good one. Therefore, proactive loan management is the key to reducing losses that occur after a longer period of time. At the same time, relationships must grow and become more profitable if the organization wants to remain competitive in its chosen markets.

Credit Relationship Management is a two-day, highly participatory workshop. It teaches commercial relationship managers the best practices for developing the profitability of credit relationships while managing the risks.

Credit Relationship Management successfully bridges credit risk management and sales development for the commercial portfolio. It is not a course in problem loans or workouts, although it teaches practices that will avoid credit deterioration. Participants learn to manage loans that are risk-rated from one to five on a scale of one to eight or ten.

What Is Included

Credit Relationship Management is primarily a case-driven relationship management simulation. At its heart is a metaphor and visual image—“The Shape of the Curve”—which represents the desirability of a customer to the organization. This curve is always changing, becoming more or less desirable. If the organization does not recognize this and does not change the shape of its own behavior curve, gaps will develop between the two curves, creating lost opportunity for the organization and vulnerability to competition or increased risk. The key messages communicated to participants are:

  • Customer desirability is always changing.
  • A relationship manager must observe, evaluate and take action to change the organization’s response curve to customer behavior.
  • If the relationship manager is skilled at observing, evaluating and taking action based on the customer’s curve, the organization can change the shape of its own curve. By doing so, it can change the shape of the customer’s curve, keeping it moving up steeper or longer, softening the downturns, and deriving maximum benefit from the relationship.

In the two-day workshop, participants learn to:

  • Monitor borrower performance with techniques to guide both the frequency and the content of communication. They will be able to tap external and internal sources of critical information on performance and opportunity, and the best ways to prioritize and document significant observations.
  • Evaluate changes in the risk and opportunity, analyze the signal, source, and the implications of both sequential and nonsequential “early warning” indicators of a deteriorating or evolving credit.
  • Take appropriate action, whether the indicators are to expand the relationship, hold the line and preserve the organization’s position, or move decisively to reduce exposure and involvement.

Delivery Options

Credit Relationship Management is delivered in a two-day workshop with a small amount of participant preparatory work. Omega Performance can lead the program, or one of our leaders can lead the first workshop and then provide leader training for the organization’s facilitators.