Credit risk management still tough in current economic conditions
Oct 31, 2012 Walt Wojciechowski
CIO recently explained three of the most important factors in credit risk management that must be accounted for by all businesses. According to the news provider, threats abound in today's hectic corporate world, and managers must first ensure the integrity of their own businesses before trying to assess the risks of others. CIO recommended starting with compliance requirements and deciphering whether the companies' practices are up to snuff with federal and state regulations. Then, businesses can analyze their performances with respect to industry best practices related to credit risk management procedures. For parties that a company intends to either loan money or conduct other business with, the credit risk assessment process does not have to be difficult. Risk managers will need to assess past performances of these potential clients, as well as credit histories, business plans and other important factors. Further, risk management professionals need to learn how to look at the finer points of potential threats before loaning out money or goods, such as employee retention rates and other auxiliary indicators of business health. Risk management in the 21st century
Loans are the biggest source of credit risk for any company, especially as the economy has bounced back and forth from healthy to ailing throughout the years following the recession. Many businesses are now in better positions, thus making them hungry for more capital to expand operations. Companies that do not feel entirely comfortable with the ins and outs of credit risk management should consider using a service provider to ensure financial security. These firms can sometimes be more affordable than hiring an internal credit risk manager, and are often more well-versed on the associated processes.