The FDIC provided a list of forward-looking credit metrics that banks should monitor as part of an effective credit management information system ("MIS").
In an article titled "Credit Management Information Systems: A Forward-Looking Approach" published in the Winter 2017 edition of Supervisory Insights, the FDIC emphasized the importance of a strong MIS in maintaining an effective risk management program. Many banks, the FDIC concluded, did not have adequate coverage of forward-looking indicators, which function to signal future performance and can help to identify and mitigate risk exposure. The FDIC expressed the concern that overreliance on performance-based, lagging indicators can make it difficult for management to evaluate risks that may lead to the future deterioration of asset quality. The FDIC provided a chart containing forward-looking credit metrics that banks should monitor as part of their MIS procedures. In addition, the FDIC stressed the necessity of implementing a strong governance framework that facilitates timely, accurate reporting regarding risks that are relevant to management's strategic decision-making.
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