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Risk Modeling

What is risk modeling?

Risk modeling is the assessment of the probability of unfavorable market conditions and the potential impact those conditions may have on a financial portfolio. Risk modeling helps predict not only the performance of investments, loans, or liability portfolios during challenging times, but also predicts the magnitude of the effects of unfavorable market swings and loan delinquencies.

Why is risk modeling important?

Risk modeling is about measuring the amount of risk inherent in certain instruments. Credit unions that practice risk modeling are better prepared to handle potential losses created by delinquent loans held by members and potential losses resulting from negative fluctuations in portfolio market value. Monitoring risk and its potential impact is key to preparing for potential downturns in portfolio value.

Who does risk modeling help?

Risk modeling provides credit union leaders with guidelines for risk exposure. Scheduled, periodic risk review against a model offers CEOs and CFOs a better understanding of their credit union’s risk profile. It gives them the insight they need to create unique balance sheet portfolios that can withstand potential challenges. Risk modeling provides hypothetical scenarios, which are then used to strategize and optimize.

Why QuantyPhi?

As a CUSO of Corporate Central Credit Union, QuantyPhi knows credit unions. Our sophisticated, risk-strategy experts are highly-skilled in developing risk models unique to credit unions. Our high-powered data analysis systems can process varying risk scenarios at lightning speed, allowing credit union leaders time to react to unexpected losses with wise, goal-aligned decision-making. QuantyPhi’s risk-modeling experts can help your credit union manage risk to your advantage.