Swiss management consultants that work projects related to risk engagements

When management consultants lead risk engagements with their clients, they often focus on credit risk modeling in relation to IFRS 9 for several reasons:

1. Implementation of IFRS 9: IFRS 9 introduces a new approach to credit risk modeling and impairment calculations. It requires financial institutions to estimate expected credit losses (ECL) on financial assets based on historical data, current information, and forward-looking factors. Management consultants help clients understand and implement the requirements of IFRS 9, ensuring that the credit risk modeling and impairment methodologies are properly designed and aligned with the standard.

2. Data and Analytics: Credit risk modeling under IFRS 9 involves analyzing extensive data sets, including historical loan performance data, macroeconomic indicators, and other relevant information. Management consultants assist clients in developing robust data management frameworks, enhancing data quality, and implementing advanced analytical models to estimate credit losses accurately.

3. Model Development and Validation: Credit risk models under IFRS 9 require sophisticated statistical techniques and modeling methodologies. Management consultants support clients in developing and validating these models, ensuring they are appropriate for the client's portfolio, comply with regulatory requirements, and align with best practices. This may involve building models to estimate credit risk parameters, developing scorecards, stress testing models, and other analytical tools.

4. Process and Controls: Implementing IFRS 9's credit risk modeling requires well-defined processes and controls. Management consultants work with clients to establish sound governance frameworks, define clear roles and responsibilities, and design effective control mechanisms. They help organizations establish credit risk assessment and reporting processes, including regular monitoring and validation of models, to ensure compliance with IFRS 9 requirements.

5. Impact Assessment: IFRS 9 has a significant impact on financial institutions' financial statements, including the recognition and measurement of impairment losses. Management consultants conduct impact assessments to evaluate the effects of IFRS 9 on their clients' financial statements, capital adequacy ratios, profitability, and other key metrics. This assessment helps clients understand the implications of the standard and make informed decisions.

Overall, management consultants focus on credit risk modeling in relation to IFRS 9 during risk engagements with clients to ensure compliance with the standard, enhance risk management practices, optimize data and analytics capabilities, and enable informed decision-making. By assisting clients in these areas, consultants help them navigate the complexities of credit risk modeling under IFRS 9 and improve their overall risk management framework.