Jul 2021 | PowerCurve Users Club | Credit Risk, Simrisk
By Posted by SimRisk

The summer edition of Experian’s international business competition is ready to begin. Jim Nowell explains how he created the format and why it has become so popular.

There is no shortage of great competitions to hold the public’s attention this summer. Now credit risk professionals from across EMEA are preparing to make their bid for glory.

Experian’s SimRisk competition provides teams with a series of simulated challenges. Their goal is to create and optimise a financial strategy that successfully negotiates each scenario, all while turning profits and minimising losses.

This summer, we are running two competitions side-by-side. SimRisk Classic is for new entrants to the competition and returning teams who are stronger for their previous experience. We’re also running SimRisk Champions League, designed to provide a stiff challenge for teams who have excelled in the past.

How did it all begin?

The SimRisk concept has its roots in 1996 when I was a risk manager at a well known financial services business. I wanted to teach analysts effective ways of analysing and setting strategies in a safe environment where they were not putting real money at risk.

You may be familiar with the game SimCity, where gamers can see the effects of different approaches to town planning. I decided to run a competition with an element of fun to heighten the learning process.

The basic principle is to allow teams to develop their own ideas for strategies, thereby making the learning more likely to stick in their memories than instructions from the front of the room. As a trainer, I find those ‘lightbulb’ moments very rewarding.

But it was only in 1998, when I moved to Experian, that I saw SimRisk’s value as a training course for strategy management and that it could be enjoyed by and beneficial to our clients.

I created a three-day version of the game based on personal loans and got delegates to use the software themselves. The results were tangible, not least on the pages of my passport, as I ran 20 courses globally. My parents asked when I would get a real job rather than being a ‘gamesmaster’…

Developing the game further

Over the years, I have refined the personal loans game to take place over 90 minutes. I’ve also continued to develop the credit cards version, so players can choose what actions to take for collections, limit management, interest rates, renewals and fees.

It’s essential players understand the consequences of their choices. A change in one area may necessitate changes elsewhere. For example, higher interest rates may dissuade customers from spending, so credit limits may need to increase to encourage them to make purchases on their cards.

The credit cards version is much more complicated and needs to run over four or five phases, with the portfolio ‘run forward’ by three months at each interval. Teams need to digest management information reports to understand their progress and what problems they need to resolve.

The pre-reading of documentation and recordings is essential for any team that wants to succeed at SimRisk to understand the system and interpret management reports.

But for teams who really want to get the most out of the sessions, I’ll be providing a few pointers in my next article.