Capital & finance
CECL Allowance
The reserve institutions set aside for expected credit losses under the Current Expected Credit Loss accounting standard.
The CECL (Current Expected Credit Loss) allowance is the reserve U.S. institutions hold for expected losses over the life of their loans, under the accounting standard of the same name.
Where fraud fits
First-party and synthetic fraud losses that surface as defaults flow into expected-loss estimates, inflating reserves. Because fraud is volatile, it makes those estimates less predictable.
Reducing the drag
Insuring the identity-fraud portion of loss makes the number steadier and can reduce the reserve burden. Related: first-party fraud and risk transfer.
Related terms