11.9.2 Payment Events

You must define one or more payment events to complete a behavior pattern. A payment event is a set of payment characteristics, which define the timeline and amount of a specific payment in the behavior pattern. While the payment types can change based on the pattern type selected, three inputs are required for all behavior patterns:

• Term
• Amount
• Type

Principal Runoff Term

The Term of the principal runoff is determined by the input of a Tenor and Multiplier. For example, if you are defining the “Volatile” component of a non-maturity instrument, you would likely define the Runoff term for the first amount as “1 Day”. In this case, Tenor = “1” and Multiplier = “Day”

Amount

The cash flow amount is defined as a percentage of the end of the period balance. For example, in the case of Non-Maturity behavior pattern type, if the assumption for the Volatile Runoff amount is that 25% of the portfolio is to be categorized as "volatile", the input should be "25". The sum of the percentages for the Non-Maturity behavior pattern type must equal 100%. The "Total Percentage" is shown at the bottom of the Pattern detail area indicating the cumulative percentage.

Payment Type

The payment type selection categorizes all payment runoff into meaningful groupings. The principal Runoff type is carried forward by the Cash Flow Engine and can be identified in the cash flow results by the following financial element codes.

• 186 Writeoff Positive
• 187 Timing of Writeoff Positive
• 188 Writeoff Negative
• 189 Timing of Writeoff Negative
• 200 Non Maturity - Core Runoff
• 201 Timing of Non Maturity - Core Runoff
• 202 Non Maturity - Volatile Runoff
• 203 Timing of Non Maturity - Volatile Runoff
• 204 Devolvement Runoff
• 205 Timing of Devolvement Runoff
• 206 Recovery Runoff
• 207 Timing of Recovery Runoff
• 208 Non-Performing Asset Runoff
• 209 Timing of Non-Performing Asset Runoff