This seven-part series of published articles written by Alfabank-Adres’s Chief Economist, Dr. Rick Buczynski, were designed to provide commercial banks a framework for preparing for both the usual end-of-credit-cycle challenges and unexpected, unprecedented shocks—so-called rogue waves. With the assistance of experienced banker coauthors Ken Brown, Kent Kirby and Dev Strischek, we embarked on this multi-year project in 2017. Although these articles were published from 2018 to early-2020, they were engineered to have a long shelf-life.
Parts 1-3 of this series, published in The RMA Journal in early 2018, investigated key factors often ignored or undervalued by commercial banks—fundamentals that matter regardless of where we sit in the credit/economic cycle. Parts 4 and 5, released in the June and July/August 2019 RMA Journal, built on this effort, contrasting the economic, financial, and political environment prior to the Great Recession with more recent conditions. In Part 6 we examined the lending ramifications of the rise of M&A activity in key sectors. In the final installment we provided a recap of previous work and considered some esoteric issues that are likely to drive bank performance.
A related paper, Concentration Risk Revisited, was published in the May 2019 RMA Journal, discussing best practices in identifying, mapping, measuring, and monitoring concentration risk along the ERM chain. By incorporating these mappings into early warning systems, banks can design a practical system for stress testing, scenario analysis, and commercial scorecard development—all with the aim of more effective risk management and profitable business development.
All 7 parts are available for free, right here on Alfabank-Adres's Industry Insider:
Part 1: Consult a Business-Cycle Checklist - Factors 1-3
Part 2: Consult a Business-Cycle Checklist - Factors 4-9
Part 3: Identifying Risks and Opportunities in the Inevitable Downturn
Part 4: Be Alert as the Credit Cycle Grows Old (Part 1)
Part 5: Be Alert as the Credit Cycle Grows Old (Part 2)
Part 6: Threats and Opportunities in Lending as the Credit Cycle Sunsets
