A bank needs a PASS/FAIL decision for new borrowings, with mitigating criteria that can turn a FAIL into a PASS.
Rule 1: New borrowings cannot exceed 30% of total assets — unless the executive committee flag is “Y” and the committee’s exposure override percentage is higher than the new-borrowings-to-total-assets ratio, in which case it PASSes anyway.
Rule 2: New borrowings cannot exceed the “1-4 Threshold” — unless the new borrowing amount is less than the customer’s available non-repo collateral, in which case it PASSes anyway.
Test data
| Customer | Total Assets | Exec. Committee Flag | Exec. Committee Override | 1-4 Threshold | Non-Repo Collateral |
|---|---|---|---|---|---|
| #200 ABC Bank | 20,000,000 | Y | 35% | 1,000,000 | 2,500,000 |
| #500 Bank One | 50,000,000 | N | 0% | 3,000,000 | 3,250,000 |
Build a decision model that evaluates both customers correctly, and show what would need to change in the mitigation rules to flip a FAILing transaction to PASS.
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