---
sourceDocument: Zurich Financial Services Operations
sourceDocumentLink: https://www.servicenow.com/docs/r/zurich/financial-services-operations

 Release :

    - zurich

ft:locale :

    - en-US

ft:publication_title :

    - Zurich Financial Services Operations

ft:clusterId :

    - finso

bundleId :

    - finso

workflow :

    - Customer and Industry


---

# Covenant Breach

# Covenant Breach workflow {#ariaid-title1}

* Release version: Zurich
* 
* Updated July 31, 2025
* 
* ![](https://www.servicenow.com/docs/portal-asset/ico-clock) 2 minutes to read

Summarize  
![AI sparkle icon](https://servicenow.com/docs/portal-asset/ai-sparkle-icon) Summarized using AI  
This content was generated using new OpenAI-powered functionality. Results are provided on an as is basis and are not guaranteed to be accurate or complete.  

## Summary of Covenant Breach workflow

The Covenant Breach workflow enables bank agents to proactively manage loan covenant breaches by contacting customers and deciding on future action plans.
It applies to both business and personal loans and supports ongoing covenant monitoring to identify and mitigate loan risks.
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## Key Features

* **Covenant Definition:** Covenants are borrower promises to comply with conditions throughout the loan term, such as submitting financial statements or insurance receipts.
* **Automated Case Initiation:** A covenant breach triggers an API or credit agent to create a Covenant Breach credit service case.
* **Task Routing and Workspace:** The workflow routes cases and related tasks to credit and back-office agents through assignment rules, with agents accessing tasks in Workspace.
* **Document Verification:** A document processor service identifies required documents, generating verification tasks for document agents, who can request deferments if needed.
* **Credit Authorization:** Credit authorizers review and approve credit tasks within the workflow.
* **Covenant Updates:** Credit agents update covenant information in the banking system via dedicated tasks.
* **Case Closure:** Upon completion of all steps, cases are marked Closed Complete with updated work notes.

## Key Outcomes

ServiceNow customers using this workflow can efficiently manage covenant breaches by ensuring timely communication, thorough documentation verification, and formal credit authorization. This structured approach helps reduce the risk of borrower default and maintains loan compliance through coordinated agent activities and automated task routing.  
Learn how bank agents, using the Covenant Breach workflow, proactively contact a loan customer for a covenant breach and decide on an action plan for the future. The workflow applies to both business and personal
loans.

## What are covenants {#covenant-breach-workflow__section_spg_b2y_vnb}

A covenant is a promise by a borrower to a bank to abide by certain conditions through the life of the loan. Covenants are set up by the bank at the time of originating a loan. Monitoring covenants is an ongoing activity for the
bank. A covenant helps a bank to identify and mitigate potential risks that are associated with a loan. When a covenant is breached, it is a signal of a potential default by the borrower.  
Examples of covenants for business loans could be:

* Quarterly submissions of financial statements by the borrower
* Monthly submissions of inventory and stock statement or unpaid invoices
{#covenant-breach-workflow__ul_mqz_gcf_wnb}

An example of a covenant for personal loans could be a periodic submission of home insurance premium receipts.
The following diagram shows how the application helps bank agents work on a covenant breach for a loan.Figure 1. Covenant Breach workflow

The following workflow routes the case and tasks for a covenant breach to agents in different departments. The agents log in to Workspace to work on the tasks in their queue.

As a credit agent or via an API
:   If a covenant breach is observed for a loan, an API in the backend triggers a Covenant Breach credit service case. A credit agent can also create this case.

As back-office agents
:   After the case is initiated and a credit agent updates the case details, a workflow is triggered automatically. The assignment rules route the associated tasks to the appropriate back-office teams.

    1. A credit agent reviews the case details and adds additional details such as the covenant compliance status.The document processor service determines the documents that must be verified for the case. The workflow
       generates an inbound document verification task for the document agent.

    2. A document agent works on the inbound document verification task to verify each document that is listed in the task. If required, this agent can request for a deferment of a specific document.The workflow
       generates a credit authorization task for the credit agent.

    3. A credit authorizer (credit agent) works on the credit task to review and approve it.The workflow generates a covenant update task for the credit agent.

    4. A credit agent works on this credit task and updates the covenant information in the banking system.
    {#covenant-breach-workflow__ol_qsl_rlp_5nb}

After the case is complete, its state and the stage are set to Closed Complete and the work notes are updated.