THE BUSINESS APPLICATION
Where and how to use it
Use it for periodic account review, movement reporting and applicable impairment workflows. It helps distinguish a real change in borrower risk from a change caused by model versions, definitions or remaining maturity.
A borrower’s current risk measure is higher than the one saved at origination. Before interpreting that as deterioration, the reviewer checks that both measures use compatible horizons and a documented model-version bridge.
From evidence to a decision
- 01Origination evidencePreserve the original baseline
- 02Current assessmentAlign horizon and definitions
- 03Migration policyQuantitative + qualitative rules
- 04Review or stage flagExplain what changed and why
DATA REQUIREMENTS
What records does it need?
These are the records your team would bring together for this analysis. The exact fields and history needed depend on your lending products, the question you want to answer and the period you want to assess.
| Record category | What it contains | Why the detail matters |
|---|---|---|
| Origination benchmark | Original risk assessment, date, horizon and model version. | Retain the assessment actually used. |
| Current evidence | Current risk, payments, arrears and qualitative indicators. | Use a defined review date. |
| Migration policy | Thresholds, qualitative triggers, exceptions and version. | Applicability must be established for the entity. |
Past loan outcomes help assess how well an estimate reflects your borrowers. For a new decision, use only the information available at that time; later repayments help you review the result afterwards.
Understand data readiness →WHAT YOU RECEIVE
The output
Migration explanations, review or stage flags and the evidence behind each applied rule.
WHAT TO WATCH
The limitations
Incompatible scores cannot be subtracted meaningfully. Missing origination evidence needs an explicit policy rather than an invented benchmark.
FOR RISK & ANALYTICAL SPECIALISTSHow the analysis works+
The modelling approach
Comparable origination and current measures feed versioned quantitative and qualitative policies. Stage or review flags are policy outcomes; a raw score difference does not by itself determine an accounting conclusion.
What your risk team should review
Horizon comparability, version bridges, qualitative triggers and reproducible policy evaluation.
The right approach depends on your portfolio and available history. Review the fit to your borrowers, the reliability of the estimates and the effect of missing information before using the result in a lending decision.