For financial assets with objective evidence of impairment, the Customer Impairment Workbench ensures that specific provision (SP) and lump sum specific provision (LSSP) are dealt with in line with IFRS 9 requirements.
The Customer Impairment Workbench is a modular solution that covers all valuation and accounting requests linked to stage 3 impairment. As such it calculates:
- Probability-weighted expected credit losses (pwECL) for financial assets on the basis of estimations of recovery cash flows. For this purpose, various scenarios of estimated recovery cash flows can be defined
- Lump sum risk provision and specific provision
It provides processes and inter-divisional workflows and approval processes for:
- Capture and maintenance of estimated recoveries and recovery rates
- Documentation of impairment trigger and other information
- Simulation and calculation of specific risk provision
The Customer Impairment Workbench makes Impairment Stage 3 transparent, traceable and finally auditable.
The modular approach and flexible design ensures taylor-made solutions in both cases. The component approach supports the recycling of measures that are already available. The process chain is divided into different steps. Each step has a clearly defined input/output interface. There are various alternative modules for each step in the process chain. Depending on the data and scope available, a financial institution can select the appropriate module for each step.