The Importance of Portfolio Monitoring
Portfolio monitoring is the process of regularly reviewing the performance of the loans in your portfolio. It's a critical part of credit risk management, as it allows you to identify potential problems early and take action to mitigate them.
Key Activities in Portfolio Monitoring
- Reviewing financial statements: This will help you to assess the borrower's financial health and identify any red flags.
- Monitoring covenant compliance: This will help you to ensure that the borrower is meeting their obligations under the loan agreement.
- Staying up-to-date on industry trends: This will help you to identify any potential risks to the borrower's business.
- Communicating with the borrower: This will help you to get a better understanding of the borrower's business and any challenges they may be facing.