Strategic Planning

From Open Risk Manual

Definition

Strategic Plan, in the context of Portfolio Management denote the direction, explicit strategies, objectives and risk tolerance of an institution, set by its management and board

The firms business policies, underwriting guidelines, and procedures communicate and support its strategic objectives

Credit Portfolio Planning Objectives

An indicative list of strategic plan elements as they specialize in the context of lending / credit portfolio management[1]

  • What proportion of the balance sheet the credit portfolio should comprise
  • Goals for credit quality
  • Goals for portfolio diversification
  • How much the portfolio should contribute to the bank’s financial objectives
  • The credit product mix
  • Growth targets by product, market, and portfolio segment
  • Product specialization
  • What the bank’s geographic markets should be
  • Targeted sectors / industries
  • Targeted market share
  • Community needs and service
  • General financial objectives (e.g., increase fee income).

References

  1. Loan Portfolio Management Comptroller’s Handbook, April 1998 (Updated June 26, 2017, for Non-accrual Status)