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Is Wrong a Better Teacher than Right?

June 2, 2011

One often hears that “experience is the best teacher”…but it is also the most expensive.  We may learn from mistakes but bankers also have to study successes in managing the balance of risk and reward.

In the ‘90’s, when I started running Latin American training, I had gotten a lot of feedback from Senior Credit Officers about the need to improve our credit training programs.  One of their complaints was that all cases had an unhappy ending and that this caused participants to accuse us of “crying wolf” or to be unwilling to take any risk at all if the outcomes were so horrible.  Genesis provided me some good solutions so that people could see some examples of actual or potential problems that the Bank had solved with customers’ collaboration.

We are currently redesigning a course for a Bank in Chile, and part of what we are doing is to substitute for cases which the client says would never make it past their initial screening criteria, situations in which one has to use the full analytical tool box not only to detect problems but to help prevent and/or fix them so that both the bank and the client can have a happy ending.

One can use “horror stories” about what happens when you ignore the basics, but has to give balanced air time to what most risk, relationship and product managers in our select target audiences deal with, the application of RAAC (Risk Asset Acceptance Criteria) and the initiation and management of risk exposure over time with clients who passed initial screening.  In these more usual situations, it is important to be alert and proactive both to seize business opportunities as well as to be able to detect and react to changes in the environment, the client, and the corresponding risk-reward balance.

by Michael L. Alcivar

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One Comment leave one →
  1. Fritz permalink
    June 12, 2011 11:35 am

    Interesting and well written, although not as good as Fritz’s superb piece.


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