From Strong Start
to Bank‑Grade.
A pragmatic roadmap from today's workable model to a scalable, data‑driven risk architecture.
A Solid Foundation
Your framework already captures the essential logic. Phase 2 is about tightening the methods, not replacing them.
Two clear pillars
Asset quality and repayment capacity — the right structural separation for an asset-based lender.
Structured, stepwise analysis
Blacklist → Location → Building → VaR: a logical progression from hard stops to nuanced scoring.
Transparent criteria
Scoring matrices and clear descriptions make the framework explainable to stakeholders and regulators.
41 deals and growing
A real portfolio generating real data — the raw material for calibration and refinement.
Current Architecture
Missing: Integration layer — combined risk grade → LTV / pricing / covenants
Where the Framework Holds You Back
Five structural gaps that limit precision, create blind spots, and reduce your ability to price risk correctly.
Deep Dive: Asset Pillar
Strengthening the blacklist, location score, building score, and VaR/LGD methodology.
Blacklist & Hard Stops
- × Limited to contamination, asbestos, zoning conflicts, legal disputes
- × No climate/flood risk screening
- × No tenant quality as hard stop
- × No ESG exclusion criteria
- Add climate & flood risk filter (flood maps, insurability)
- Tenant red flags: single tenant + weak credit + short lease → conditional
- ESG no‑go's: heavy VLAREM risks, CO₂‑intensive activities
- Decision tree a junior can follow without interpretation
Location & Building Score
One generic weighting for all asset types. Subjective items like "prestige" and "zichtlocatie" leave room for interpretation.
Current weights (all types)
Type‑specific scorecards with hard, reproducible inputs: drive‑time, ADT, zoning, VITO data.
Logistics
Office (urban)
Retail (strip)
Building Score Reweighting
Current
Proposed
Value at Risk & LGD
- 3‑year inflation/deflation brackets + linear aging
- Blend of forced sale + free sale × score
- LGD adjusted because loan is "too big" in portfolio
- Conflates asset risk with portfolio concentration
- Scenario‑based values using cap‑rate shocks
- Separate asset LGD from portfolio limits
- Explicit rules: years of VaR allowed, deal thresholds
- Type‑specific LGD curves as data grows
Max LTV determined by adverse scenario. Severe for concentration cases.
Deep Dive: Counterparty & Cash Flow
From macro ratios to deal‑level cash flow metrics, and a single combined risk grade.
From Macro to Deal‑Level
Generic SME survival ratios, macro added‑value stats from older studies
Deal‑specific DSCR and ICR focused on the lease/debt obligations
Robust Sponsor Metrics
Distinguish "strong sponsor / weak asset" vs "strong asset / weak sponsor"
One Combined Risk Grade
Asset score (location, building, sustainability, LGD band) meets financial score (DSCR, ICR, leverage).
Matrix → defines LTV, pricing range, and monitoring level.
Integrated Risk Decision Matrix
Combined asset + financial score → LTV, pricing, monitoring
| Strong Asset | Medium Asset | Weak Asset | |
|---|---|---|---|
| Strong CF | 75% LTV
+100 bps | 75% LTV
+100 bps | 65% LTV
+200 bps |
| Medium CF | 75% LTV
+100 bps | 65% LTV
+200 bps | 55% LTV
+350 bps |
| Weak CF | 65% LTV
+200 bps | 55% LTV
+350 bps | 55% LTV
+350 bps |
What the Upgraded Framework Gives You
The bridge from 41 deals to institutional‑grade capital.
Sharper Pricing, Same DNA
You keep your current logic, but every risk step has a visible pricing and LTV impact. No more binary accept/reject — continuous risk‑adjusted terms.
Conversation‑Ready
Clear separation of asset risk, counterparty risk, and concentration limits, with documented assumptions. Ready for banks, regulators, and institutional funders.
Future‑Proof & Data‑Driven
Every deal logged with scores and outcomes — raw material for PD/LGD curves later. Sustainability integrated from day one, not retrofitted.
How We Propose to Work With You
A two‑phase engagement that delivers quick wins while building toward institutional readiness.
Phase 1
6–8 weeks
- Translate current framework into structured scorecards and Excel tools
- Design the risk grid for LTV / pricing / covenants
- Integrate sustainability / EPC‑NR and basic VaR scenarios
- Build decision trees for blacklist and hard stops
- Define DSCR/ICR thresholds and financial score bands
Phase 2
6–12 months
- Pilot on all new deals, log data and overrides systematically
- Quarterly refinement of thresholds and score bands
- Portfolio dashboard: concentrations, scenario impact, expected loss
- Simple stress‑testing routines (expert‑based shocks)
- Formal model governance framework with annual recalibration
Ready to discuss the roadmap?
Let's turn this diagnosis into a concrete implementation plan tailored to your portfolio and growth trajectory.
Schedule a Working Session