Among these tools are models that estimate the risk-adjusted return on capital and thus allow lenders to price relevant risks before loan origination. Other tools include proprietary internal debt-rating models and third-party programs that use market data to analyze the risk of exposures to corporate borrowers that issue stock.
Banks have also come to appreciate the importance of independent controls within the credit review and rating process. Innovations in technology have facilitated significant improvements in bank information systems, a development that the Basel II proposal also has encouraged. These systems increase the ability of bank management to identify, measure, and control key characteristics of portfolio risk.