You’d Never Approve a $15M Loan the Way You Approve a $50M Transformation. Why Treat Them Differently?

Your organization will spend 6 months assessing a $15M loan.

Risk models. Stress testing. Independent credit officers. Loss provisions.

Then you’ll approve a $50M digital transformation based on:
• A business case written by the people who want to run it
• A delivery plan from the vendor who wants to sell it
• Zero downside scenario modelling
• 10% contingency when industry data shows 70% of programs overrun by 30-50%

You’d never lend money this way. Why do you invest in transformation this way?

I have spent over 20 years in transformation in financial services.

Here is one idiosyncratic observation – financial services are sophisticated about credit risk and amateur about transformation risk.

And it’s costing more than bad loans ever did.

▪️ Because when a loan goes bad, you provision for it and move on.

▪️ When a transformation program goes bad, you double down on it until you’ve burned through three times the original budget, because no executive wants to be the one who “killed” a strategic initiative.

What would change if you applied credit risk discipline to transformation decisions?
Five things:

1️⃣ Independent Assessment
You don’t ask borrowers to assess their own creditworthiness. Stop asking sponsors to validate their own programs.

2️⃣ Downside Scenario Modelling
You don’t just model the “everything works” case. Model stress and severe stress scenarios. Then ask: at what point do we cut our losses?

3️⃣ Risk-Adjusted Pricing
High-risk loans get more scrutiny. High-risk programs should get independent assurance from day 1, not after they’re failing.

4️⃣ Realistic Loss Provisions
If 70% of programs overrun, portfolio provision should be 25-30% of transformation spend. Not 10%. You’re provisioning for reality, not hope.

5️⃣ True Independent Validation
Credit officers don’t report to relationship managers. Transformation assurance shouldn’t report to program sponsors.

Independence isn’t about adding process. It’s about separating “wants to succeed” from “assesses likelihood of success.”

👉 Save this to pressure-test your next transformation business case.”
👉 Send this to whoever writes your next $50M business case.”

If you’re a CRO or CFO and you’ve ever wondered why transformation governance feels like theatre compared to credit governance, this one’s for you.