Mark K. Vitelli First vice president, consumer lending, People's Bank, Bridgeport, Conn.

Q.: Have new risk management techniques compensated for the risk inherent in the fast growth of consumer credit in recent years? Yes, I believe they have. The capabilities and the availability of data, the capabilities of . . . data base systems and the improvement in PC technologies have allowed more information be accessible more quickly and to be acted upon in a faster time frame.

It's really all these technologies that have enabled the risk manager to know far more information far earlier - and to take action in a much more coordinated fashion than they have in the past. The ability to do these things on-line in real time in the direct environment has really allowed the risk people to do more. And because they're able to do more and handle more, it allows the portfolio to grow more.

The credit card industry is probably the best example of that, with the larger players . . . growing at compounded rates of clearly above 25% - some of them, like us, probably 50%, some others in excess of 100%. George J. Butvilas President and CEO, D&N Financial Corp., Hancock, Mich.

Q.: Can technology replace good old-fashioned judgment in determining risk? That's the $64,000 question. In many respects, it's still going to boil down to somebody talking to people . . . something beyond just the number crunching.

That's not to say that these different software packages aren't invaluable.

I still think, in many respects, that human interaction cannot be replaced.

In the mid 80s, when (D&N) got into purchasing participations, it probably would have been good to have some sort of ancillary systems to look at the risk of some of these things.

In the business of banking, in order to stay competitive, I think the trend going into the future is you will have to use some form (of risk management software). I can remember people talking about this in the 70s when I started in the banking business, and clearly, it's evolved over time. You'll see more of this risk analysis done over computer. Gail Janssen President and chairman, F&M Bancorp., Kaukauna, Wis.

Q.: Do you want regulatory guidance in setting your risk management policies? At F&M, we have not had difficulty with risk management from a regulatory standpoint or from an internal policy standpoint. I think that any financial institution that operates on a sound banking philosophy will not have difficulty with changes in risk management guidelines.

I think where the difficulty will be is when financial institutions try to carry the risk side of their business to excess. Then, the regulatory side will have a greater impact.

I really think that the commercial banking industry has very effectively policed itself. My concern with regulatory activities is that we usually see excesses in the regulatory side. We are adequately regulated presently for risk management. The regulation always covers a very broad portion of our banking industry, when the risk is only created by a very few. There is the potential to regulate the abuses and not the total industry.

- Compiled by Barbara Bronstien

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