Sageworks poll: 66 percent of bankers don’t currently practice scenario building

What percentage of bankers plan to run scenarios in preparation for CECL implementation?

RALEIGH, NC (May 16, 2016) — A recent Sageworks poll of professionals from banks and credit unions found that 66 percent of respondents do not currently practice scenario building as part of their institutions’ risk management processes. However, 59 percent indicated that they plan to begin scenario building in preparation for implementation of the FASB’s CECL model.

Sageworks, a financial information company that provides loan portfolio and risk management solutions to banks and credit unions, conducted the poll during an April 20th webinar, Strategic risk management & CECL prep. The first poll asked attendees how they would describe their institution’s strategic risk management practices. According to responses from 259 individuals across the country, a third say they stress test, but don’t run scenarios, and 17 percent don’t run scenarios, describing their processes as reactive risk management. Another 16 percent of respondents don’t currently run scenarios, but would like to.

Though 66 percent of bankers do not currently run scenarios as part of their risk management processes, a separate poll conducted by Sageworks during the same webinar indicated that 59 percent of 228 respondents anticipate running scenarios in preparation for CECL implementation. Of the 66 percent, 42 percent said they plan to run scenarios to measure the capital impact, and another 17 percent said they plan to test scenarios with robust methodologies.

“At many institutions, the reserve analysis is a time-consuming process and Excel calculations may not lend easily to creating different scenarios,” says Sageworks Senior Risk Management Consultant, Aaron Lenhart. “However, we know scenario building will be a key component to CECL preparation, and it can also be utilized by institutions to defend the effectiveness of their incurred loss reserve calculation and/or support (negative) allowance provisions,” he says.

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About Sageworks

Sageworks offers banks and credit unions lending, credit risk and portfolio risk software to efficiently grow and improve the borrower experience. By automating the life of the loan with Sageworks, bankers book commercial loans faster and reduce risk. Sageworks uniquely provides integrated solutions and industry expertise to more than 1,400 financial institutions that achieve an average 38% higher loan growth than peers. Visit to learn more.


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