4most’s Alan Lucas retires and reflects on 40-years working in Credit Risk

Alan Lucas, Associate Partner and Head of Research and Innovation at 4most, has retired at the age of 73. His illustrious career includes over 40-years of experience within credit risk, truly stamping him as one of the most knowledgeable in the industry. 

We caught up with Alan to celebrate the incredible impact he has had on 4most and the industry as a whole. He shared a break down of his career journey and his top 10 most notable changes he has observed over 40 years:  

How did you kick-off your work life?

After gaining a maths degree at Manchester University, I had an inkling to apply for a job as a ‘tea taster,’ as there was potential to travel the world. However, my mother wisely told me not to waste my education and so I started my first employment in Transport Modelling for a salary of £2,000 per year. 

There have been three major career phases in my life:

1. Transport Modelling
2. Operational Research
3. Credit Risk

Can you tell us about your credit risk career journey? 

Credit risk, the third career phase, has been the longest – 40 years. It has been extremely rewarding. 

• 1983 – credit scoring at United Dominions Trust (a TSB subsidiary). 
• 1989 – consultancy work and handling internal IT at Scorelink.
• 1992 – in charge of the credit risk analytical team at Barclaycard. 
• 2000 – was a director of the research team at Equifax. 
• 2002 – joined the consultancy arm of KPMG. 
• 2003 – set up a credit risk business with two colleagues (Rhino Risk), doing mainly Basel II work. 
• 2011 – set up two further businesses (Avenir Risk and Avenir Applications). 
• 2015 – joined Lloyds Bank. 
• 2017 – finally come to 4most!

As I progressed, I stayed connected with universities, arranging joint research, and tried to keep myself in the forefront of credit risk activities. One useful networking and information-gathering opportunity was the biennial Edinburgh Credit Risk (CRC) conference run by the management school there.

What are the 10 things that changed the most across your time working in credit risk?

The credit risk industry is vastly different compared with when I started: 

1. 1. We now have a better understanding of credit risk. A simple example of this is that in the early days risk models only examined expected loss but overlooked unexpected loss (which is the true risk). Moreover, we gained a better understanding of the theoretical nature of calculating risk at the end of the last century, along with related problems such as the maths of ‘options pricing.’
   2. Regulation has become much more complex and prescriptive. Compliance becomes a mixture of following definite rules, trying to determine what exactly the rules are stating, and understanding the practical implications. E.g. the Hybrid-PD models that banks have been constructing for mortgages operating under the IRB regime. Trying to meet regulatory expectation, whilst trying to produce sensible results, can be quite difficult and time-consuming.
   3. Lenders can purchase systems, such as Triad, to implement their risk models to allow risk-based credit decisions.
   4. The scope of risk has expanded under the climate change/ESG banner.
   5. Computers have become ubiquitous and an order of magnitude more powerful.
   6. Programming languages are more complete. When I started working, I had to learn Fortran-4, Algol-60, and the Basic language on the early micro-computers. Later, I switched to Pascal and C++. Now, I code in SAS, R, and Python, which focus more on data analysis.
   7. AI is making inroads and will undoubtedly change the landscape of data analytics, risk, and insurance.
   8. You can now study risk (including credit risk) at university. The graduates that we recruit at 4most have a more useful basket of tools and background knowledge compared with what students had when I was at university (e.g. data analysis, python coding).
   9. Information is readily available online. I believe self-learning on the internet, rather than further post-university courses, is the key to keeping up-to-date and cementing fuzzy knowledge (watching YouTube videos allowed me to brush up on topics that I did not fully understand from my maths degree).
   10. Most people in credit risk now tend to come from a direct analytical background (economics, statistics, physics). In the early days this was not the case. I have worked with musicians, a philosopher, a chemist and numerate people with no high-level qualifications. The key element of success was their wish to take on new projects and to learn new things.

How would you describe your time working at 4most?

The most crucial element impacting my time at 4most is the people. Although 4most excels in all areas, it is particularly striking how we manage to recruit people who are well-qualified and genuinely have all the best human qualities. This makes a tremendous difference when working on projects as it means each person is conscious of the capabilities of those in their team and collaboratively aim to maximise the group’s happiness and quality of deliverables. 

I like to play chess when I can and competed for teams when I was younger. One aspect that I noticed was the diversity of team members and opponents. There were large age differences – one could have 12-year-olds playing (and sometimes beating) 60-year-olds. There were also differences in background and employment. It mattered not if one person was a managing director, and the other was a road-worker. 

In club vs club matches, our collective goal of beating the opposing team brought us together. I like to think that 4most is the same. We have a common interest, irrespective of age, culture, and background – and a common goal to provide quality deliverables to our customers.

Overall, my entire career has been diverse, interesting, challenging and rewarding. However, it is the people I will remember most.

Thank you, Alan! 

Alan has left a tremendously positive impression on the colleagues and clients he has worked with, and we are grateful that we have had the privilege of having him and his vast knowledge and forward-thinking nature at 4most. We wish Alan all the best in his retirement!