CECL scenario service
A solution for projecting expected credit losses built on decades of forecasting expertise.
LATEST INSIGHTS
Overview
Meeting the requirements of FASB’s Current Expected Credit Loss (CECL) accounting standard requires more than just a baseline forecast.
Financial institutions need transparent, probability-weighted economic scenarios that reflect current conditions, underpin reasonable and supportable calculations, and withstand audit and regulatory scrutiny.
Oxford Economics provides independent CECL scenario services built on one of the world’s leading macroeconomic modelling frameworks. Combining decades of forecasting expertise, transparent methodology and ongoing economist support, our quarterly scenarios help banks and lenders strengthen expected credit loss estimates while improving consistency across the provisioning process.
How we help
We provide baseline, upside and downside macroeconomic scenarios specifically designed to support CECL provisioning. Each scenario includes associated probabilities and the quarterly updates include comprehensive supporting documentation, helping organisations meet governance, audit and accounting requirements with confidence.
Our Severe Downside scenario is designed to be broadly comparable in severity to the Federal Reserve’s Severe Adverse CCAR scenario, providing an additional benchmark for risk assessment.
Our scenarios provide internally consistent macroeconomic assumptions across the United States, including local forecasts for all 50 states and 382 metro areas.
Outputs cover the key economic and financial variables used in ECL models, including GDP, unemployment, inflation, interest rates, exchange rates, residential and commercial property prices and financial asset prices. This helps institutions assess expected credit losses across diverse portfolios.
Economic conditions evolve rapidly. Our scenarios are updated quarterly to reflect changes to the global outlook and emerging risks, ensuring provisioning assumptions remain relevant throughout the reporting cycle.
We also currently support a range of clients with bespoke solutions to align with their internal processes. This can include bespoke modelling of specific series, off-cycle updates or even fully bespoke baselines forecasts or scenario assumptions.
Our service extends beyond delivering scenario outputs. Every quarterly release includes detailed analysis explaining changes in economic conditions, the judgements informing our outlook, and the assumptions behind the scenarios.
Clients also benefit from access to research from across Oxford Economics, providing broader insight into the national and regional economies underpinning our CECL scenarios.
Throughout the reporting cycle, our production team and economists remain available to answer technical questions, explain changes and support responses to auditor requests. A dedicated account manager provides ongoing support, helping clients apply the scenarios with confidence.
Why Oxford Economics
Decades of forecasting expertise
Our CECL methodology is built on more than 45 years of forecasting experience. By analysing historical forecasting performance and comparing forecasts against actual economic outcomes, we develop robust probability distributions that reflect real-world uncertainty. This long forecasting history, covering multiple historic crisis episodes, strengthens the credibility and consistency of our scenarios.
Transparent methodology
Transparency is essential for effective governance and audit readiness. By using Oxford Economics’ Global Economic Model as the basis for our scenarios, we use the same tool used by central banks, finance ministries, international organisations, financial institutions, and corporates across the globe. Its fully documented model structure and assumptions support internal validation, audit processes, and regulatory review.
We also clearly explain how our scenarios are constructed, how probabilities are assigned and how changes in the balance of risk influence each quarterly update. This enables risk, finance and audit teams to understand, review and explain the assumptions underpinning their ECL calculations.
Independent scenarios across every US market
Our CECL scenarios combine national, state and metropolitan forecasts within a single coherent modelling framework, giving institutions consistent assumptions across their portfolios while reflecting regional economic conditions. Our dedicated regional forecasting team and their subnational US model also inform the baseline forecast and provide additional insight through their publications and databanks.
A trusted long-term partner
Oxford Economics supports financial institutions with independent macroeconomic scenarios through changing economic conditions and reporting cycles. Clients value not only our forecasting expertise, but also our transparent communication and long-term partnership throughout the reporting cycle. Clients are also supported by the analysis from our 400+ in-house economists, who can provide detailed feedback on queries around the assumptions underpinning the forecast, and interim updates of the baseline forecast in response to global developments.
Contact us
If you would like to learn more about our CECL scenario service, please fill in the form. A member of the team will be in touch with you as soon as possible.
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