Magazine article The RMA Journal

Beating the Odds Revisited

Magazine article The RMA Journal

Beating the Odds Revisited

Article excerpt

In 1998, Beating the Odds, RMA's study of 126 community banks, created the industry's first risk management benchmarks for hundreds of other community banks to follow. In 2003, RMA and Verrone Consulting Group brought together 159 banks--not only to follow the progress of the practices covered in 1998 but also to address for the first time operational and enterprise-wide risk management practices in community banks. The results are in, and this fall more community bankers than ever can reap the rewards.

The update, Beating the Odds: Revisited, broadens its focus to include smaller institutions than those studied five years ago. Objectives of the new study include providing an inventory of current risk management practices, identifying practices that influence safety and soundness, identifying and promoting best practices, and providing benchmarks for all community banks. Topics include:

* Portfolio risk management.

* Risk grading.

* Credit approval and credit scoring.

* Capital allocation and reserves.

* Credit database and accounting.

* Market risk.

* Credit risk pricing and profitability.

* Securitizations and participations.

* Business risk.

* Workouts.

* staffing and resource management.

* Operational risk management.

* Enterprise-wide risk management.

The best planning for risks comes when bankers have a broad view and know what their peers face and how others are handling risk. The first step in risk management is risk identification, and this study helps bankers identify risks that threaten community banks and shows ways to assess, monitor, manage, and control each risk type. …

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