



Terminal Risk Analysis is a method that uses an institution’s prior loan behaviors in terms of ratings shifts and repayment patterns to more accurately predict future loan outcomes. It looks at prior time slices of behavior to generate an exhaustive view of the only two future outcomes that matter — repayment and charge-off. This information enables a lender to calculate an ALLL at the right level to strike a healthy balance between protection and the availability of funds. This was a great presentation with lots of good information from Jeff Judy.