In an integrated economy like ours, small bank lenders are affected by national business conditions, just less so than lenders to large firms. Formal risk management in banking The large institutions, with their declining overall asset quality, understandably have pioneered more-formal risk-management techniques designed to capture quantitatively the changing riskiness of exposures and presumably induce more rapid responses to such measures.
This is the latest development in a changing balance of power between lending officers and risk-control officers. The lending officers, in a competitive economy, may tend to be more interested in getting business than in evaluating risk.