Credit Risk Modeling Is Due for a Redesign—Here’s Why
William Black
Consumer Credit and Structured Finance Expert | Credit Risk Management Leader
Dr. Joseph Breeden thinks the industry is long overdue for a reset. In the latest episode of the Consumer Credit Matters podcast, we dig into what’s broken—and how to fix it.
With decades of experience developing models across mortgages, auto loans, and consumer credit, advising top financial institutions, and authoring books like Redesigning Credit Risk Modeling to Achieve Profit and Volatility Targets, Joseph has seen firsthand where traditional models fall short and what’s needed to bring them into the modern era.
In our conversation, we cover:
?? Why traditional credit models are failing in today’s volatile economy
?? The biggest blind spots in risk measurement today
?? His philosophy on modeling: what works, what doesn’t, and what needs to change
?? How AI, alternative data, and new methodologies could reshape risk assessment
If you work in lending, risk management, or structured finance, you won’t want to miss this one. The way we model risk is changing—are you keeping up?
?? Watch or Listen now (??Don't forget to subscribe to the podcast while on your favorite platform, links below):
YouTube ?? https://youtu.be/q1vON6lOQGM
#ConsumerCredit #CreditRisk #RiskModeling #Finance #FinTech #ABS
I don’t doubt that cash flow data can enhance predictive models. But I guess I have some ethical questions. Just because we can do something, does it mean that we should? Society is moving more and more into centralized control and data collection. With movement toward digitization of all financial transactions. With the IRS and banks tracking $600 transactions in your accounts. And now potentially, detailed reporting on your personal financial transactions in order to obtain credit. Do we no longer believe in financial privacy? A strong argument can be made to collect performance data on your credit obligations, because you are applying for new credit. But if we end up creating cental databases with all of our individual financial transactions, are we crossing a line that we won’t be able to reverse? With all the history of data breaches, is this a new risk for our privacy? Just a thought …
Founder, Einstein Higher Edu Solutions | #ML, #AdvancedDataAnalytics, #StudentLoan Domain Expertise
1 周Comprehensive discussion Will! You were effective. The three functions (APC approach) that are used to measure cash flow yield were insightful. The use of ML to solve one of the three functions was equally interesting. I plan on buying his book