What is porfolio risk management? It is the active and effective oversight of the current client base with the intent of:

  • Maximizing client retention –LOVE
    • Everyone wants to retain clients and deepen relationships!
  • Maximize cross-sell opportunities –LOVE
    • Again, everyone wants to retain clients and deepen relationships!
  • Minimize loss potential due to credit risk issues –HATE
    • No one wants credit issues to develop!
  • Minimize loss potential due to operational risks –HATE
  • Maximize profitability through timely identification of risk and appropriate allocation of capital –LOVE / HATE
So, here are a few questions for you to focus your targeted portfolio management efforts.

  • Which clients are likely to need additional products and services?
  • Which clients have a high potential of leaving your financial institution?
  • When do you shift from client retention to credit risk management?