IRB | UK

A stronger IRB approach to credit risk

At 4most, we pride ourselves on maintaining long-standing relationships with every client we work with. One of our longest and most successful relationships is with a well-known, leading UK retail lender that provides high street and internet banking, current accounts, mortgages, savings accounts, credit cards and loans.

With stringent regulatory changes on the horizon, the bank first contacted us as it looked to modernise and transition in a highly challenging landscape.

One mission, many goals

We quickly identified that the bank would need a multi-faceted, strategic approach to achieve all its goals. With that in mind, we set out to deliver a number of services across several different functions.

This included advising on internal governance frameworks, strengthening the bank’s validation function, and a number of model redevelopment activities.

A hands-on approach

Our immediate priority was to work closely with our client to understand their specific requirements and provide expert advice they could trust. This ensured we could help the bank develop numerous methodologies, finalise internal policies, and oversee governance processes for the remediation and redevelopment of its risk framework.

But what makes 4most true specialists is our ability to take a hands-on approach when it matters most. Our extensive knowledge in model development meant that we could take the lead on remediating and redeveloping the bank’s IRB capital models, as well as create a model monitoring suite.

“I believe our long-term partnership with the bank has helped it to secure its position as a leading UK retail lender.”

Damien Partner, 4most

Validation, validation, validation

The Bank’s ongoing seven-year relationship with 4most has resulted in a highly successful function, a well-established validation framework, and a strong credit risk function. This has allowed the Bank to react quickly to regulatory changes whilst maintaining their position as a strong UK lender.

The validation function was another crucial part of the process. To perform this effectively, we worked as part of a long-term, insourced partnership to augment the bank’s internal independent validation team.

Our main objective was to support both new and annual model reviews, which meant:

Creating checklists for both internal standards and external regulations.
Constructing model validation templates with consistent approaches and guidelines.
Defining clear validation ratings and definitions, driving the final review outcomes.
Building a model inventory, allowing simple action logs with resolution tracking.
Producing IRB model attestation documentation, alongside attestation reviews.

Seven years of success

We’ve been working with the bank for many years now. In that time, we’ve helped them build a highly successful function, with a well-established validation framework that’s supported by strong credit risk foundations.

As a result, the bank has continued to react quickly to any regulatory changes in its market, while still maintaining its position as a leading UK retail lender.

Can 4most support your organisation in a similar way? Let us know how we can help you by completing our short contact form.