The Basel Accord requires detailed loss modeling factors to determine the capital requirement: Probability of Default (PD), Loss Given Default (LGD), Exposure at Default, and Maturity (EAD). Accurate quantitative modeling of PD, LGD, and EAD is not only required under the accord but can become a competitive advantage leading to superior credit performance. The financial institution and relevant regulators are not the only interested party in the level of delivery vis-à-vis the Basel Accord. Rating agency analysts will be monitoring the Basel implementation and using that as a key driver in their assessment of the organization's risk capabilities. This is a time of change where organizations can maintain, improve, or lose their risk reputations.

To learn more about how a single warehouse platform with a consistent, unified data model can improve risk modeling, risk parameter estimation, and validation processes, download the pdf.