LPM Exam Questions and Answers
100% Pass
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
Emily Charlene, All Rights Reserved © 2025 1
, 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
Emily Charlene, All Rights Reserved © 2025 2
100% Pass
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
Emily Charlene, All Rights Reserved © 2025 1
, 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
Emily Charlene, All Rights Reserved © 2025 2
