The Great Big Bank has recently conducted a review of its small-business loan failure rates and is concerned about the results. There is strong evidence that failures are increasing disproportionately to loans made and that amounts recovered are decreasing. Interviews of local loans managers suggest a good deal of confusion about how to assess risk, when the bank should call a loan, and what mechanism best meets the bank’s needs after the loan has been called. In addition, the credit market is tight and GBB senior management has ordered that lending requirements be strengthened. Based on all of this information, the bank is redesigning its basic training manual. The primary focus now is on the section entitled “The loan has gone bad. Now what do you do?”