EY to conduct breakfast event on Early Warning Systems

Ernst & Young (EY) Sri Lanka will be hosting a breakfast event on Early Warning Systems (EWS) on 22 January at Mövenpick Hotel, Colombo 3, from 8.00 a.m onwards. 

The event will acquaint participants with the fundamentals of EWS and the implementation of the same in banks. The event primarily targets the Chief Risk Officers and Chief Executive Officers in the banking industry. 

Early Warning System is a highly rated and productive technique deployed by top-tier banks and financial companies in the world, a welcome measure to cope with financial vulnerability. It is a framework of guided processes and rules to identify risk at a nascent stage which propagates implementation of a corrective action plan, incentivising early identification and reporting of stressed assets. The event is expected to lay the foundation for this ground-breaking technique which is yet to be implemented in Sri Lanka. It also presents a valuable opportunity for participants to meet the members of the EWS implementation team and learn about the essentials of EWS.

The event will be graced by an eminent panel of speakers keen on sharing their knowledge. EY Sri Lanka Financial Services Partner Sanath Fernando will present an introduction to EWS, EY India Partner Ajay Sirikonda and EY India Risk Analysis Partner Nimilita Chatterjee will discuss the EWS implementation road map, EY Sri Lanka Financial Accounting Advisory Services Partner/Principal Rajith Perera will present a current state analysis, and finally EY India Risk Senior Manager Sanjay Pantula will speak on the challenges faced in the implementation of EWS. The participants will also be given the opportunity to share their thoughts and resolve any issues related to the topic.

The participants are to be educated on the current state analysis, five-stage credit life cycle, the need to implement EWS in this tech-era, the challenges with respect to EWS expressed by banks and the EWS implementation road map. 

An EWS framework consists of two basic components, the first of which is Credit Risk Management, which enables identification of stressed assets based on which corrective actions may be initiated to contain the deterioration of credit quality. The second component is Post Disbursement Compliance Risk Assessment, which enables evaluation of the extent of operational compliance to the banks’ specific internal procedures and guidelines.

A comprehensive and well-structured EWS assists the top-level management to predict possible defaults from customers that may adversely affect the institution. Some of the key advantages of an EWS framework are its capability in identifying stress signals well in advance by leveraging data from internal and external sources, the ability to implement the proposed action plan until completion and the ability to assist in effective communication in triggered accounts to internal and external stakeholders. 

By utilising EWS, banks can alleviate the risk of non-performing loans and reduce the impact of payment delinquency whilst minimising the likelihood of customer defaults, proliferating the collateral value of defaulted loans and decreasing the exposure of defaulting customers.