As many as two-thirds of bankers and credit union professionals do not yet practice scenario building as part of their risk management processes, according to a recent Sageworks poll.

However, while 66 percent of the bank and credit union professionals polled said they didn’t practice scenario building, 59 percent said they planned to begin scenario building in anticipation of the Financial Accounting Standards Board’s coming CECL rule.

Aaron Lenhardt, a senior risk management consultant with Sageworks, said he wasn’t particularly surprised by the results, but he expects to see financial institutions – and particularly community financial institutions – to begin to move in the direction of scenario building as they prepare for CECL.

“There’s a lot to do,” he said. “I know we’ve got several more years before the implementation date, but CECL is really a project management issue because there’s a lot that financial institutions need to do to prepare around scenario building and understanding the impact to different areas of the bank.”

Sageworks conducted the poll during a webinar focused on risk management and CECL prep. The first poll asked attendees how they would describe their institution’s strategic risk management practices. According to responses from 259 individuals across the country, a third say they stress test, but don’t run scenarios, and 17 percent don’t run scenarios, describing their processes as reactive risk management. Another 16 percent of respondents don’t currently run scenarios, but would like to, Sageworks said.

Right now, however, Lenhardt said he sees banks and credit unions mostly working through the early stages, collecting data and trying to wrap their heads around the potential impact to their organizations. It’s of particular concern to smaller organizations that may not have a wealth of historical data for certain kinds of loans.

“[Financial institutions] need to understand what data they have, what form it’s in, and the other things can influence it. If you’re going through a merger or you’ve had changes to the way you handle data … those are the types of issues you want to be aware of. It can impact the data you have and how clean that data is,” he said. “It is a bigger concern for smaller institutions. There’s no doubt about that.”