A leading regional bank was struggling with elevated credit risk exposure after rapid portfolio growth left its risk assessment models fragmented and outdated. The institution faced pressure from both investors and regulators to demonstrate stronger capital planning and enhance stress testing. Recognising these challenges, the bank engaged our team to audit and transform its credit risk frameworks. Canali Partners’s solution involved a comprehensive review of the bank’s loan-level data, identification of chronic data quality issues, and development of enhanced probability-of-default and loss-given-default models. We also designed and executed stress tests using macroeconomic downside scenarios relevant to their portfolio concentrations. As a result, the bank uncovered €73 million in tail risk exposure and implemented sector-specific risk limits, which reduced annual expected losses by roughly €16 million and improved the efficiency of capital allocation. These improvements gave stakeholders renewed confidence in the bank’s resilience and met rigorous regulatory standards.