CPM’s Critical Role Amid the Rising Credit Risk Environment

The IACPM completed its 2023 survey on Principles and Practices in CPM.  Sixty-five member firms globally participated in the 2023 Survey. The Survey looks at the evolution of Credit Portfolio Management, organizational structures, mandate and priorities, and tools used to manage the credit portfolio over time and looking forward.

Survey results provide insights across an array of firms and an opportunity for IACPM members to confidentially benchmark their CPM practice with those of other leading financial firms.  Conducted once every two years, Principles and Practices in CPM is IACPM’s most read survey.

The 2023 Survey was conducted amid a changing and uncertain economic and geopolitical environment. Conditions included rising inflation, tighter monetary policy, and signs of credit deterioration in certain sectors as well as geopolitical concerns (e.g., war in Ukraine, China/U.S. tensions, etc.).

As capital becomes more scarce and credit risk is under increased scrutiny at all firms, the role of CPM in shaping the credit portfolio is recognized as critical and expanding in banks and financial institutions throughout the world.

Accordingly, current priority considerations for CPM include capital efficiency, concentration management, as well as sector and asset strategies. To support these priorities, banks globally are expanding their skillsets in data analytics, data science, ESG and Climate. The integration of ESG and Climate metrics into risk and portfolio management is transforming origination and risk mitigation as new markets and standards develop.

CPM’s organizational structures are evolving, as appropriate at their firms (no “one size fits all”), to meet the new challenges and opportunities that are confronting the industry in this rapidly changing and demanding environment. The right building blocks are already in place.

Results of the 2023 survey have been shared with participating firms. Past results can be found here.

The public White Paper of key findings is available here.

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