Exposure

Exposure/Credit exposure is the total amount of credit extended to a borrower by a financial institution or lender. The magnitude of credit exposure indicates the extent to which the lender is exposed to the risk of loss in the event of default. Credit exposure is a significant risk indicator, and FIs often limit the amount of exposure that can be associated with a relationship.

Prior to the Titanium release, Q2 Origination supported the calculation of Individual and Global Credit Exposures at the account level. With the Titanium release, you can use the Exposure page to select the relevant parties that must be considered for exposure calculations.

For the selected parties, all the existing loan/LOC accounts are fetched from the staging tables/core and displayed on the Exposure page. The inflight applications of the selected parties are also displayed. You can include/exclude the loan/LOC accounts and the inflight applications for calculating the exposure. 

An API for Calculate Exposure is made available, which can be invoked in the flows. Calculate Exposure button on the Exposure Analysis Page also  . You can factor these values in defining scorecards, policy exceptions, and application approval criteria to track the breach of a defined overall global credit exposure.

Policy conditions can be configured in the system to check if the overall relationship exposure (Sum of exposure of selected parties) is not exceeding a "dollar value." This is to check that the FI is not exposed more to a specific borrowing relationship. 

Policy condition rule: Global Direct Exposure must be less than $ xxxxxxx.

Prerequisites

Before you begin to calculate the exposure at the application level by selecting a party, ensure that the following prerequisites are met:

• The loans/LOCs are added to the staging tables to display the existing loan/LOC accounts on the Exposure page.

• Interface contracts, interface bank accounts, and interface parties are created and mapped. (This could be via the Core Batch File or Coresman Integration)

Steps

To calculate the exposure at the application level by selecting a party:

1. Log in to your Salesforce account.

2. Go to  (App Launcher) > Applications.

3. On the Applications tab, and from the list of applications, select the required application.
   

   The application dashboard is displayed.

4. Go to  More > Exposureand select Calculate Exposure or Edit Exposure to recalculate the exposure values.
   

   If the exposure is calculated for the first time, the following page is displayed with the Calculate Exposure button:
   

   
   Or
   

   If the exposure is already calculated and you want to recalculate it, the following page is displayed with the Edit Exposure button:
   

   
   

5. Select the party for which you want to calculate the exposure.
   

   Note:

   You can select multiple parties to calculate exposure for the application.
   

   

   Active Loan Contracts

   • This table lists all the active loan contracts of the selected parties where the party types are in (borrowers, co-borrowers, guarantors, beneficial owner, or lessee).

   • A loan contract is displayed only once.

   • The Include In Exposure option allows you to include/exclude a loan contract from exposure calculation.

   • The list of contracts and their current balances is refreshed when the Calculate Exposure/ Edit Exposure button is selected.

   • Partial Payoff Amount - If you want to pay off an amount for the contract from the requested loan amount, specify the amount in the Partial Payoff Amount field. Then, the difference amount (Current Balance - Partial Payoff Amount) is considered for exposure calculation.

   • Contracts and their balances considered for exposure calculation of an application are stored for that application only.

   Other Loan Applications Being Originated

   • This table lists all the inflight applications of the selected parties where the party types are in ("borrowers, or guarantors").

   • Application with the status that is configured in the Org Parameters > Closed Status are not listed here in this table.

   • An application is displayed only once.

   • If the Renewal checkbox is selected, the application is excluded from the exposure calculation.

   • For package application, only the parent application is listed in this table and is considered for calculating the proposed exposure.

   • The application for which the exposure is being calculated is not listed in this table.

   • The Include in Exposure checkbox is selected for all the applications. Deselect the checkbox for the application that you don't want to consider in the exposure calculation.

   • The list of applications is refreshed when the Calculate Exposure/ Edit Exposure button is selected.

6. Select the Edit Exposure button to edit the details and recalculate the exposure.

Example

On top of loan applications in Q2 Origination, DELL Inc & DELL Financial Services have already availed loans from other FIs. The details are as follows:

• Direct and Indirect Exposures are calculated  as follows:

  Account Name	Direct Exposure	Indirect Exposure
  DELL Financial Services	12000	35000
  DELL Inc.	35000	7000

• Direct and Indirect Proposed Exposures are calculated  as follows:

  Account Name	Direct Proposed  Exposure	Indirect Proposed  Exposure
  DELL Financial Services	334000	58000
  DELL Inc.	88000	37000