Credit Escalation Process

From Open Risk Manual


Credit Escalation Process is the increasing attention and significance of Credit Risk Management measures taken by and organization on the face of materially deteriorating Credit Risk profile of a client or Counterparty.

An escalation process might commence after the triggering of Early Warning Indicators (EWI).

EBA Requirements[1]

When an EWI has been triggered for closer monitoring and further investigation, immediate action should be taken in accordance with the institution’s policies and procedures.

  • The designated functions should perform an analysis in order to assess the severity of the triggered event and to propose suitable action and follow-up. This analysis should, without undue delay, be presented to the relevant credit decision makers designated in the policy and procedures.
  • Relevant credit decision makers should, based on the abovementioned analysis and other relevant accessible information, decide on the appropriate next steps. The decision should be documented and should be communicated to relevant parts of the institution for action and follow-up.
  • Triggering EWIs should lead to an increased frequency in the reviewing process, including discussions and decisions by credit decision makers, and more intense information gathering from the borrower. The information gathered should be sufficient to support more frequent credit reviews of the borrowers.

See Also


  1. EBA, Guidelines on loan origination and monitoring EBA/GL/2020/06