01 / PUT IT INTO PRACTICE
Put a baseline beside the proposal
A proposed model or growth plan should be compared with current practice when that baseline is available. Keep the portfolio, horizon and available information aligned. Otherwise a difference may reflect changed inputs rather than a better decision.
02 / PUT IT INTO PRACTICE
Change assumptions deliberately
Separate facts from choices. Funding cost, recovery timing and growth volumes may be scenario assumptions; historical payments are observed records. Change a clearly identified driver or a coherent group of drivers and retain the original case for comparison.
- Credit: risk estimates, exposure and loss severity.
- Economics: interest, fees, funding and operating costs.
- Timing: repayments, prepayments, recoveries and funding maturities.
- Constraints: liquidity, concentration, capital and operating capacity.
03 / PUT IT INTO PRACTICE
Look at the path as well as the total
A plan can generate a positive total contribution while running short of cash in an intermediate period. Longer tenure can increase scheduled interest while extending funding needs. Examine the timeline, component breakdown and constraints, not just a final ranking.
04 / PUT IT INTO PRACTICE
Ask whether the conclusion is stable
Use plausible alternatives to expose fragile choices. A sensitivity analysis asks how the result moves when assumptions move. Statistical uncertainty asks a different question about the estimate. Label them separately and investigate when either changes the preferred action.
EXAMPLE / PUTTING IT INTO PRACTICE
Compare an unchanged lending plan with faster origination. Keep costs and risk definitions consistent, then examine a coherent downside with slower collections and tighter funding. The useful result is the period and cause of any constraint, not an unsupported promise of growth.
WHAT YOU TAKE FORWARD