Data Science in Economics and Finance for Decision Makers

Data Science in Economics and Finance for Decision Makers

Preorder now: The CECL Handbook: A Practitioners Guide

The CECL model implementation requirement arguably represents one of the most influential changes to accounting standards which financial institutions have ever seen. The new standard may upend many business areas within an organisation, affecting loan origination, commercial policies, and portfolio strategy and management, to name but a few.

Financial institutions have to implement the CECL accounting standard by January 1, 2023. The CECL Handbook; A Practitioner’s Guide is the reference book for 2023 adopters and a great training manual for staff within banks that have already adopted.

The team of editors – comprising several senior directors from Moody’s Analytics – Masha Muzyka; Laurent Birade; Yashan Wang; and former head of Research, Jing Zhang, have brought together a unique group of experts experienced in preparing and implementing the new CECL model.

£145.00
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ISBN
Preorder now: The CECL Handbook: A Practitioners Guide
 

The CECL model implementation requirement arguably represents one of the most influential changes to accounting standards which financial institutions have ever seen. The new standard may upend many business areas within an organisation, affecting loan origination, commercial policies, and portfolio strategy and management, to name but a few.

Financial institutions have to implement the CECL accounting standard by January 1, 2023. The CECL Handbook; A Practitioner’s Guide is the reference book for 2023 adopters and a great training manual for staff within banks that have already adopted.

The team of editors – comprising several senior directors from Moody’s Analytics – Masha Muzyka; Laurent Birade; Yashan Wang; and former head of Research, Jing Zhang, have brought together a unique group of experts experienced in preparing and implementing the new CECL model.

Set out over three sections this book provides a comprehensive instructional guide, covering key assumptions, requirements and challenges for different asset types as well as different stakeholders in the process such as auditors, management, investment analysts and regulators. The book also considers the downstream processes impacted by the new implementation and guidance.

PART I: REQUIREMENTS: describes the CECL requirements and presents an overview of the most impactful challenges encountered during initial implementation both from an auditor’s and a banker’s perspective.

PART II: INDUSTRY IMPLEMENTATION PRACTICES: discusses specific industry-implementation practices.

PART III: BUSINESS IMPACTS AND IMPLICATIONS: explores how institutions need to think through the impact on processes such as portfolio management, origination and loan pricing, as well as provides tips for becoming better at data-driven decision making.

The new standard’s impacts are wide and far-reaching, it is an understatement to say that the forward-looking CECL standard is a game-changer and this book provides readers with a roadmap to effective credit risk measurement and management which complies with the new accounting standard.

More Information
ISBN 978-1-78272-433-9
Navision code MCEC
Publication date April 12th, 2021
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Laurent Birade, Mash Muzyka, Yashan Wang, and Jing Zhang

Laurent Birade is a senior director responsible for providing risk and finance integration expertise across solutions, products and services offered by Moody’s Analytics in the US and Canada. As a domain expert in financial services since 2005, he has accumulated a wealth of knowledge on the effective integration of risk and finance processes. Laurent has participated in a variety of imple- mentation projects in the US and Canada, and has advised financial institutions on key regulatory issues such as CCAR, DFAST, and IFRS 9 and CECL credit loss reserving. Laurent has published on a broad range of topics, such as operational risk, risk-based pricing and stress testing practices, and has written numerous articles on the new allowance standards (IFRS and CECL). Laurent holds a bachelor of accounting/MIS  from HEC and an executive MBA from St Mary’s College of California, and is a member of PRMIA, of which he is also an acting steering committee member for San Francisco and Vancouver.

Masha Muzyka is a senior director at Moody’s Analytics, where she leads a team of senior domain experts in risk and accounting in the US. Masha works with a variety of clients, including banks, credit unions, insurance firms and corporates, solutioning for risk and finance integration processes. Masha is a leading accounting expert on CECL at Moody’s Analytics, assisting clients in solutions implementation, coordinating solution integration offerings, providing thought leadership and advisory. Prior to joining Moody’s Analytics, Masha developed strategic relationships with regional and community banks at a fintech company, where she managed a team of product and solution design experts to ensure customer needs were met through software products and services. She also spent eight years in banking and financial services industry specialising in audit and technical accounting policy. Masha is a frequent speaker at various industry conferences covering CECL and its implementation, and she has published a breadth of diverse work on the topic. She holds a bachelor of economics degree from Moscow State University, a CPA licence in Virginia, and is a member of AICPA.

Yashan Wang is a senior director at Moody’s Analytics, where he heads the research and quantitative modelling team for portfolio valuation, accounting and balance-sheet analytics. He has broad experience in quantitative finance in banking, credit portfolio modelling and derivative pricing, and has led research initiatives in developing and integrating models to calculate impairment under IFRS 9/CECL/SAP across asset classes. Yashan has also worked with global clients, providing training and advice on enter- prise risk management, asset and liability management, and stress testing. Prior to joining Moody’s Analytics, he was an assistant professor at the MIT Sloan School of Management. Yashan’s work has been published in leading academic and industry journals, including The Annals of Applied Probability and the Journal of Banking and Finance. He earned a BS in electrical engineering from the University of Science and Technology of China and a PhD in management science from Columbia University.

Jing Zhang conducts research and teaching on modelling the finan- cial impacts of climate change and environmental risk. From 2009 to January 2021, he was a managing director and the global head of Moody’s Analytics Research and Modelling Group. Jing joined the research team at the former KMV in 1998, eventually becoming a director in the Research Group, where, besides managing research operations, he made major contributions to a number of KMV quantitative models. Since then, he has held a number of senior roles in product management and the Client Solutions Group, and has many years of experience advising clients on risk management issues. Jing was a lecturer for the Master of Financial Engineering program at the University of California, Berkeley, from 2010 to 2012, and served as an associate editor of The Journal of Credit Risk from 2016 to 2020. His research papers have been published in both academic and industry journals, including the Journal of Time Series, the Journal of Fixed Income, the Journal of Credit Risk, and the Journal of Risk Model Validation. He has also edited a number of books, including Managing Climate Risk:A Practical Guide for Financial Institutions (forthcoming 2021); Credit Risk Measurement and Management: Disruption and Evolution (with Amnon Levy); The New Impairment Model Under IFRS 9 and CECL; and CCAR and Beyond, all published by Risk Books. Jing obtained a PhD from the Wharton School of the University of Pennsylvania and an MA from Tulane University.

About the Editors                                                                                ix
About the Authors                                                                             xiii Abbreviations                                                                                  xxiii Acknowledgements                                                                        xxvii

PART I: REQUIREMENTS                                                                 

 

1    An overview of CECL: setting the context                                 

Graham Dyer, Grant Thornton LLP

 

2    Outlining the most impactful assumptions and challenges under CECL: an auditor’s view                     

Benjamin Havird, PwC

 

3    Outlining the most impactful assumptions and challenges under CECL: a banker’s view                       

Dylan Adams and Diane Menzo, Flagstar Bank

 

PART II: INDUSTRY IMPLEMENTATION PRACTICES           

 

4    A banking industry perspective on key CECL decisions       

Mike A. Shearer, PwC

 

5    Challenges and solutions for wholesale portfolios                 

Jimmy Yang and Kenneth Chen, BMO Financial Group; EY

 

6    Challenges and solutions for retail mortgage portfolios   

Joshua Wander, Northwest Bank

 

7    Challenges and solutions for retail credit card portfolios   

Jason Eckhardt, American Express

 

8    Challenges and solutions for student loans                           

Tom Russo, Sallie Mae

 

9    Challenges and solutions for securities portfolios              

Dima Babykin, Transamerica

 

10  The evolution of purchased loan accounting: from FAS 91 to the CECL transition                                  

Michael W. Brown, Hilltop Holdings Inc

 

11  Challenges and solutions for qualitative allowance           

Isidore Verla, First Citizens Bank

 

12  Challenges and solutions: an auditor’s point of view         

Joseph D. Bielecki, KPMG

 

13  Early view of CECL integration into stress testing:practical approaches                                                 

Ken Carson and Francisco Covas, Umpqua Bank; Bank Policy Institute

 

14  Too many cooks in the kitchen: mastering the art of managing CECL volatility                                      

Cristian deRitis and Christopher Stanley, Moody’s Analytics

 

PART III: BUSINESS IMPACTS AND IMPLICATIONS           

 

15  Beyond CECL: rethinking bank transformation                    

Christopher Stanley, Moody’s Analytics

 

16  Data collision: efficient lending under CECL                         

John Toohig, Raymond James

 

17  Cutting through the hype: how CECL is impacting investor views of procyclicality, credit analysis and M&A                                                                                                    

Saul Martinez and Catherine Mealor, UBS; Keefe, Bruyette and Woods

 

18  Concentration risk: the CECL magnifying glass                   

Amnon Levy, Pierre Xu and Masha Muzyka, Moody’s Analytics

 

19  Closing thoughts                                                                             

Laurent Birade, Masha Muzyka, Yashan Wang and Jing Zhang, Moody’s Analytics