Forward-Looking Information

From Open Risk Manual


Forward-Looking Information, in the context of IFRS 9 [1], is an enhanced information set that includes credit information pertaining to future developments (including for example macroeconomic developments). The inclusion of forward-looking information along with traditional Past Due (realized events, historical data) information is considered to produce comprehensive credit risk information.

The inclusion of forward-looking information is a distinctive feature of an IFRS 9 ECL model. Incorporating economically stressed states of the world and their potential impact on credit performance is critical for the timely recognition of credit losses.


  • When considering forward looking information firms should apply sound judgement consistent with generally accepted methods for economic analysis and forecasting and supported by a sufficient set of data[2]
  • Credit institutions should be able to demonstrate how they have considered relevant, Reasonable and Supportable Information in the ECL assessment and measurement process.
  • Credit institutions should apply experienced credit judgement in the consideration of future scenarios and take into account the potential consequence of events occurring or not occurring, and the resulting impact on the measurement of ECL.
  • Information should not be excluded from that process simply because an event has a low likelihood of occurring or the effect of that event on the credit risk or the amount of expected credit losses is uncertain.
  • In certain circumstances information relevant to the assessment and measurement of credit risk may not be reasonable and supportable and should therefore be excluded from the ECL assessment and measurement process. Given that these circumstances would be exceptional in nature, credit institutions should provide a clearly documented, robust justification.
  • The information used shall include an unbiased consideration of relevant factors and their impact on creditworthiness and cash shortfalls. Relevant factors include those intrinsic to the bank and its business or derived from external conditions

See Also


  1. IFRS Standard 9, Financial Instruments
  2. EBA/CP/2016/10 Guidelines

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