Industry-Led Risk Management Initiative Provides Commercial Credit Benchmarking

Industry-Led Risk Management Initiative Provides Commercial Credit Benchmarking

RMA and AFS Launch Risk Analysis Service

Philadelphia, Pa (April 16, 2003) — RMA — The Risk Management Association, in alliance with Automated Financial Systems (AFS), this week launched an independent, external benchmarking service for commercial lending risk exposure. The Risk Analysis Service offers a never-before-available look at the performance and composition of credit risk. Risk Analysis Service will acquire and analyze a participating institution's commercial loan information, and report on its risk profile as well as on how it compares to the industry.

The Service is expected to provide information that will be used for risk self-assessment purposes by exposing segments of the portfolio where excessive risk is occurring. Designed primarily to enhance sound risk management practices within the industry by providing consistently prepared, industry standard benchmarks, the Service will additionally help both line and risk managers meet stringent new reporting requirements. The Service will provide information that can be used to gain further insight into commercial loan default and loss trends as well as refine risk-rating systems.

The Risk Analysis Service has been under development for the past several months in conjunction with an industry steering committee from eight leading financial institutions that helped to shape the design and parameters for the Service, thus ensuring its overall relevance and providing for meaningful output. Initially, the Service will focus on the middle market and large corporate portfolios. The Service will provide a detailed analysis of commercial loan portfolio segments by asset size, loan product, collateral type, industry, geography, and vintage. Risk migration reporting will also be a feature of the Service.

"We envision this process to provide our members with a critical benchmark for best practices and self-assessment," said Maurice H. Hartigan II, president and CEO of RMA. "Unlike industry surveys, the basis for the Service will be participating banks' full commercial lending databases. Using actual lending data vastly enhances the granularity, and accuracy of the resulting information."

"A critical industry initiative," is how John Shain, president of AFS, described Risk Analysis Service. "By focusing deeply at the individual loan level, we will be able to create a new RMA benchmark metric that financial institutions can depend on for standardized risk measurement and assessment of the dynamics of change," said Shain. "In extending our unique data integration capabilities to RMA members in this collaborative Service, we are able to provide the opportunity for participation to the entire industry."

Financial institutions with commercial credit portfolios of over $1 billion are expected to participate.

More information about the Risk Analysis Service can be found within the Risk Management's Best Practices section of RMA's Web site. You can also go to the following Web address for direct access: http://www.rmahq.org/Ed_Opps/benchstuds.html.

About RMA

RMA is the leading professional association to promote effective risk management practices across the entire financial services industry. RMA urges institutions to assess their enterprise risk by measuring and managing the credit, market, and operational risk in their portfolios. Headquartered in Philadelphia, RMA has 3,000 institutional members- banks of all sizes and nonbank institutions. They are represented in the association by 16,000 professionals in the 50 states, Puerto Rico, Canada, and numerous foreign cities, including Hong Kong, Singapore, and London.

About AFS

With more than 33 years of experience in delivering financial services software and consulting services, AFS is the industry leader in the execution of lending and treasury management solutions for top-tier financial institutions. Over $1 trillion in loans are currently processed on AFS' systems. The firm is headquartered in Exton, Pennsylvania.