GENERATIVE AI IN CREDIT RISK MANAGEMENT A Game Changer for Loan Review Generative AI and the New Loan Review Process The evolution of banking and risk management over the past few decades has been nothing short of remarkable. From paper-ledger loan reviews to digital spreadsheets and now to artificial intelligence, each leap has brought efficiencies that reshape how financial institutions assess credit risk. Generative AI in credit risk management is the latest step forward, offering a transformative approach to loan review. By streamlining processes, improving accuracy and providing deeper insights, AI is set to redefine risk assessment for banks and credit unions. Mitigating Risk and Increasing Consistency One of the biggest challenges in credit risk management is ensuring consistency across reviews. Traditional methods rely on individual experience and manual checks, which can introduce variability and human error, especially as individual loan reviewers’ years of experience trend downward. Generative AI in credit risk management addresses these concerns by standardizing reviews, applying consistent risk parameters and identifying patterns that might be missed by even the most experienced analysts. For new analysts, AI acts as a built-in training tool, providing real-time guidance and helping them get up to speed faster. Kirby said, “Loan Review Assistant is a wonderful training tool for newer analysts, allowing us to reduce the time needed to onboard them while maintaining high-quality risk assessments.” With AI handling repetitive tasks, loan review professionals can concentrate on complex cases that require human expertise. A New Era of Loan Review Efficiency Loan review teams have long faced challenges balancing speed, accuracy and staffing constraints. As financial institutions deal with growing portfolios, evolving regulations and a shifting workforce, maintaining consistency in credit risk assessment is more difficult than ever. BY KENT KIRBY SENIOR CONSULTANT, PORTFOLIO RISK, ABRIGO 12 In Touch
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