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Category: Insight | Date: 09/06/2022

Nine points of caution to consider in credit risk management

Businesses are currently exposed to greater levels of trading and credit risk than ever before.

Continuing uncertainty, mounting inflated costs, economic volatility and increased competition are just a few of the reasons for this.

By turn, it is increasing demand for specialist services, intricate analysis and guidance to help gain extra competitive advantage.

Our newest instalment, Xenia Xtra, will impart that additional snapshot intelligence, information and support from Xenia’s very own Credit Risk Analyst, Roberto Simone to help take advantage of trends, while comprehending the risks and identifying any opportunities.

It is a fortnightly fusion of hints, tips, and information, which can be absorbed in a short space of time. The wide-ranging outline centres around many topics - but all related to the business environment, credit risk and those critical areas to observe.

There’s no magic formula for managing credit risk and it’s not a science, but with careful insight, forethought and deeper understanding you can help negate risk whilst maximising the odds that you’ll succeed.

For now, here are nine points of caution to consider in credit risk management, which will form the early structure and focus on this new series with a study on each point over the corresponding weeks:

  1. Always remember, no one is too big to fail or encounter issues
  2. Think twice, even if the business appears to have reliable backing and support
  3. Keep an eye on the news and treat well-known brands with the diligence that you would use on an unknown smaller business
  4. Continually monitor and review
  5. Insolvencies are set to rise, particularly as interest rates climb, so act with extra vigilance
  6. Look out for the highly leveraged businesses and those with complex ownership structures or inter-group financial support
  7. Remain observant for changes in marketplace behaviour, for example M&As, economic indicators, commodity pricing
  8. Always read the notes in the statutory accounts
  9. Be prepared for other customers who are in the supply chain to be impacted too

Roberto Simone
Risk Development Executive