• Information Systems Review
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• v.9 no.2
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• pp.129-147
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• 2007

At the time the local credit-card companies plunged into a liquidity crisis in 2002, S-Card was urged to take into account the estimated customer income (ECI) to enhance its customer credit evaluation function for the first time in Korean financial industry. Before this new attempt by S-Card, most credit-card companies including S-Card had performed a customer's credit evaluation based on the customer's behavioral factors such as the amount of purchase on credit, debt payment, and financial history that is provided from the Credit Bureau. However, this approach failed to measure customer's potential value which is one of the major factors in judging the customer's ability to pay, and hence, led to difficulties in risk management. The purpose of this case study is to present the better approach to sophisticated risk management for financial firms in Korea by reviewing S-Card's process of customer income estimation and its application to risk management.