Implications of Y2K customer risk issues for the allowance for loan and lease losses

Much has been written about the Y2K issue and how financial institutions should assess their customers' readiness from a risk management perspective. However, very little has been written about what institutions can or should do about providing for losses that may result from a customer's lack of preparedness. This issue will be taking on increased significance. Some of the issues involved for the allowance for loan and lease losses, regulatory expectations, and the industry's current practices, are discussed.