Keeping a credit supply lifeline during COVID-19
May 26, 2020
COVID-19 is now the biggest global event—and challenge—of our lifetimes. While banks traditionally play a key role in anchoring the economy amid severe economic stress, they are not immune to fallout from this pandemic.
Credit defaults top the list of immediate risks banks face. Tempting solutions such as using excess capital and liquidity to boost lending could raise asset quality implications over time. Our report, Rapid response: Keeping a lifeline of credit supply during COVID-19, explains why leaders should balance responsiveness and resiliency, applying the fundamentals of integrated risk management in building a credit supply lifeline.
During this pandemic, banking customers’ needs are as varied as customers themselves. Retail customers are shuffling bills without pay while global corporations are struggling to issue bonds to cover debts. Banks face some additional complications:
Given the pandemic and the economy’s underlying condition, banks—and particularly chief risk officers—can take steps now to manage credit risk and maintain a credit supply lifeline:
This calls on leaders to strike a balance between responsiveness and resiliency. The fundamentals of integrated risk management apply more than ever.
As the pandemic continues, managing credit risk remains an important, but complex, challenge. What can banks and their chief risk officers do to help?
Banks are essential to stabilizing the global economy amid this pandemic, but as we’ve seen, the climate is far from stable for banks themselves. Chief risk officers can take steps to address credit risk concerns now and moving forward, to maintain a steady credit supply lifeline for banks and their customers.
To help our clients navigate both the human and business impact of COVID-19, we’ve created a hub of our latest thinking on a variety of topics. Visit our hub and check back frequently for more insights.