Decision Record

A decision record is the second of the two audit trails every underwritten legal-asset position should generate. Where a prediction record states what a model concluded about a matter's probable outcome and duration, a decision record states what the institution actually did with that conclusion: the price, the structure, the capital committed, the cost of that capital, and the portfolio context the position was evaluated against, all captured at the moment of commitment. A properly built decision record references the specific prediction record it relied on, by version and timestamp, so a later reviewer can confirm exactly which distribution the desk was pricing against rather than reconstructing the sequence from memory or from a narrative document written after a result was already known. Keeping the decision record as an artifact distinct from the prediction record, rather than merging the two into a single retrospective memo, is what allows a governance review to distinguish two very different failure modes after a loss: a prediction that was genuinely wrong, or a prediction that was right but priced badly by the desk anyway. An institution asked to produce a decision record for a specific, named position should be able to do so as an independently verifiable artifact, not as a description of the process that supposedly generates one.