Watch List

Definition

Watch List is any list (a subset) from a universe of securities, loans or other financial instruments that is identified for more intense monitoring. This is typically for the purpose of better Risk Management, but potentially also as a means to identify upside opportunities.

Credit Watch List Policies

In Credit Portfolio Management context, , watch lists are an essential element of the Credit Risk Monitoring framework:

Institutions should establish policies and procedures for monitoring credit exposures and borrowers with increased risk, including those identified though the monitoring of EWI – watch list. Monitoring of such watch list should lead to specific reports being regularly reviewed by the head of risk management function, the heads of functions involved in credit granting and the management body.

Institutions should consider in the monitoring of the watch list the following aspects:

1. analysis of negative events or trends, which may adversely affect a group of borrowers (including but not limited to economic, demographic or technological threats);
2. considerations of borrower’s credit scoring/rating;
3. closer contact with borrowers with request for additional information, including financial projections;
4. review of credit limits, analysis of whether limits with undrawn amounts may be decreased or cancelled;
5. establishment of specific action plans with borrowers, where appropriate. Such plans should include concrete and timed measures to achieve full and timely repayment, subject to ensuring fair treatment of the individual borrower.

See Also

• Early Warning Indicators
• Early Warning System