14 Credit Discipline Tools for Directors to Diagnose and Monitor Their Institution’s Credit Culture


The market and the regulatory community pay close attention to a financial organization’s credit culture because a strong credit culture is critical to the success of credit risk management. Directors can employ 14 credit discipline tools to diagnose and monitor management’s efforts to implement, maintain, and ensure that credit risk and the credit culture stay on track. Successful credit risk management relies on a strong credit culture to support and execute strategies and policies. These 14 tools offer an expedient way to test the quality of credit risk management and also serve as techniques for remediating and improving credit culture and credit risk management:

  • Written credit policy
  • Risk-driven credit analysis
  • Uniform credit packages
  • Experienced underwriting
  • Informed decision-making
  • Proper loan approval—minimal credit policy exceptions
  • Valid, granular risk rating system o Reliable closing and booking—minimal loan documentation exceptions
  • Loan performance monitoring and reporting
  • Independent loan review and audit functions
  • Adequate loan loss reserve
  • Professional problem asset management
  • Credit lending and training

Dev Strischek
Devon Risk Advisory Group LLC