Recession planning can create opportunity in uncertainty

To put it simply, a lot has been going on.

Credit issues resulting from the pandemic were less volatile than they could have been thanks to the financial stimulus lending organizations received. Today, as a recession looms, some organizations might be operating with a sense of security or expectations of assistance that could lead to complacency and a reluctance to recognize risk.

Additionally, shifts in the workforce have left many lending organizations’ staffs spread thin. Senior talent might have retired or migrated away, and training programs for junior talent have had less structured investment in recent years. The overall size of a department could be smaller, or the department could have grown in responsibilities without adding more staff. The resources to hunt down statements and analyze lending outlooks might not be available.

Amid these less-than-ideal conditions, many organizations still feel pressure to replace paid-off loans, increase growth, and keep their interest income up in a slowing loan market. Risk management might yield recommendations that complicate the pursuit of these goals – even if the advice is ultimately well informed.

Reasons abound for not evaluating readiness for an oncoming recession. But what if there were incentives for proper assessment and preparation that could help prevent loss and increase future lending opportunity?

A good preparedness strategy – whether for a recession or any future disruption – starts with an assessment of current goals, gaps, and needs in your lending functions.

If your organization needs help with getting its bearings, creating a recession plan, or executing its goals, our credit professionals can offer seasoned experience and resource-saving tools to help you succeed.

Crowe consultants have created an extensive checklist that can serve as a good starting point for your evaluations, focusing on areas including staffing, oversight and governance, policies and procedures, and reporting.