LPM Exam Questions and Answers With Verified Solutions 2025
LPM includes what? - ✔✔All systems/process/controls used by the board and management to plan/
direct/organize/control lending operations
What is the primary goal of LPM? - ✔✔Manage institution credit risk exposure
What is credit risk? - ✔✔The potential for losses from borrowers failing to pay loans (repayment and
collateral risk)
What are the three causes of credit risk? - ✔✔Political, economic and environmental (weaknesses in
LPM are also significant drivers)
Risk ID and LPM tell us what? - ✔✔Risk ID = what is there
LPM = how and why it got there
LPM depends on what? - ✔✔Accurate risk ID
Does LPN make current risk go away? - ✔✔No, but it better positions institutions for downturns
Management information systems are what kind of control? - ✔✔Preventative
An adequate MIS provides what? - ✔✔Sedation/accurate/timely information on conditions/
quality/performance of loan portfolio to enable timely/prudent board and management decisions
Board MIS policies should what? - ✔✔1. Communicate board expectations
2. ID reporting needs and when to report
3. Ensure complete/usable/accurate information
4. Address automation and integration
, What is the key to data? - ✔✔Accuracy
Effective internal reporting is essential for what? - ✔✔Effective portfolio management
What does portfolio management reporting do? - ✔✔1. Ensure lending operations are in line with
everything
2. Provides assurance that loan portfolio objectives are being achieved
What are the steps to implement change? - ✔✔1. ID need - Monitors/detective controls/eval. tools
2. Determine impact/cause - data/analytical tools
3. Implement change - board planning/policy/controls
What is key to implementing change? - ✔✔Accurate/timely data and effective reporting
What is directing? - ✔✔Basic function of management.
Guide/motivate/lead/influence toward goal attainment
What key components of LPM are increasing in importance? - ✔✔1. Job descriptions/performance
appraisals
2. management supervision/feedback
3. staff training/meetings
What are two big key components in the primary source of direction for portfolio management? -
✔✔Policies and procedures
Board policies do what? - ✔✔Define board expectations, flexible, acceptable risk/lending practices
Procedures define what? - ✔✔Management framework for implementing policy
LPM includes what? - ✔✔All systems/process/controls used by the board and management to plan/
direct/organize/control lending operations
What is the primary goal of LPM? - ✔✔Manage institution credit risk exposure
What is credit risk? - ✔✔The potential for losses from borrowers failing to pay loans (repayment and
collateral risk)
What are the three causes of credit risk? - ✔✔Political, economic and environmental (weaknesses in
LPM are also significant drivers)
Risk ID and LPM tell us what? - ✔✔Risk ID = what is there
LPM = how and why it got there
LPM depends on what? - ✔✔Accurate risk ID
Does LPN make current risk go away? - ✔✔No, but it better positions institutions for downturns
Management information systems are what kind of control? - ✔✔Preventative
An adequate MIS provides what? - ✔✔Sedation/accurate/timely information on conditions/
quality/performance of loan portfolio to enable timely/prudent board and management decisions
Board MIS policies should what? - ✔✔1. Communicate board expectations
2. ID reporting needs and when to report
3. Ensure complete/usable/accurate information
4. Address automation and integration
, What is the key to data? - ✔✔Accuracy
Effective internal reporting is essential for what? - ✔✔Effective portfolio management
What does portfolio management reporting do? - ✔✔1. Ensure lending operations are in line with
everything
2. Provides assurance that loan portfolio objectives are being achieved
What are the steps to implement change? - ✔✔1. ID need - Monitors/detective controls/eval. tools
2. Determine impact/cause - data/analytical tools
3. Implement change - board planning/policy/controls
What is key to implementing change? - ✔✔Accurate/timely data and effective reporting
What is directing? - ✔✔Basic function of management.
Guide/motivate/lead/influence toward goal attainment
What key components of LPM are increasing in importance? - ✔✔1. Job descriptions/performance
appraisals
2. management supervision/feedback
3. staff training/meetings
What are two big key components in the primary source of direction for portfolio management? -
✔✔Policies and procedures
Board policies do what? - ✔✔Define board expectations, flexible, acceptable risk/lending practices
Procedures define what? - ✔✔Management framework for implementing policy
