Before revision:  The proposed method will deepen the understanding of practical properties of EL, aligns the EL with actually observed risk impact on capital and has the potential to improve the quality of EL-based business decisions. Besides assumptions on the stability of parameter estimates and default identification, there are no further requirementson the underlying credit risk parameters .
After revision:  The proposed method will deepen the understanding of practical properties of EL, aligns the EL with a clearly defined and observable risk measure and provides a link between upcoming IFRS 9 accounting standards for loan loss provisioning with IRBA regulatory capital requirements .