Tips for navigating credit risk management
Oct 26, 2012 Walt Wojciechowski
Business has become increasingly global in recent years, as new and affordable technology allows even smaller firms to conduct operations overseas. One of the more important factors when doing business abroad is credit risk management, as the marketplace becomes more complicated on an international stage. Though consumer credit in the United States has improved significantly throughout this year, the same does not go for every country around the globe. Businesses can avoid the risks associated with shoddy credit decision making by adequately managing risk internally, through adherence to best practices. Expert gives credit risk management advice
Business and Leadership recently spoke to Stuart Ramsden, a credit risk management expert who focuses on issues related to global trade. According to the news provider, Ramsden purported that exporting has been a crucial tool to improve overall economic conditions in most countries, but this has led to more credit risks than ever before. The expert suggested that many businesses do not take advantage of the resources available to them to avoid credit risk problems when beginning to export. International business rules can be extremely difficult to understand and follow, but every country has resources in place to help companies mitigate the risks. Ramsden told Business and Leadership that businesses should always ensure due diligence of the countries they intend to trade with prior to exchanging goods and finances. Further, companies can use service providers to more adequately manage credit risks on the global stage. The expert's company conducted research that found the biggest problems facing exporters when it comes to credit risk management include understanding foreign laws and not adequately researching destinations. Credit risk management firms that specialize in these practices can help reduce the instance of lost finances when doing business overseas. Organization offers credit risk tips
The Global Association of Risk Professionals (GARP) recommends that companies create accurate credit models that give a better idea of the different risks associated with each country with which they intend to do business. GARP also explained a distinction between credit risk and market risk, which is important to segregate when formulating a strategy. Assessments of credit risk should be simultaneously broad and precise, as both annual trends and specific instances need to be taken into account prior to financial and product exchanges. GARP added that the five c's of credit - capital, capacity, conditions, collateral and character - should all be considered when conducting research of new markets.
Business and Leadership recently spoke to Stuart Ramsden, a credit risk management expert who focuses on issues related to global trade. According to the news provider, Ramsden purported that exporting has been a crucial tool to improve overall economic conditions in most countries, but this has led to more credit risks than ever before. The expert suggested that many businesses do not take advantage of the resources available to them to avoid credit risk problems when beginning to export. International business rules can be extremely difficult to understand and follow, but every country has resources in place to help companies mitigate the risks. Ramsden told Business and Leadership that businesses should always ensure due diligence of the countries they intend to trade with prior to exchanging goods and finances. Further, companies can use service providers to more adequately manage credit risks on the global stage. The expert's company conducted research that found the biggest problems facing exporters when it comes to credit risk management include understanding foreign laws and not adequately researching destinations. Credit risk management firms that specialize in these practices can help reduce the instance of lost finances when doing business overseas. Organization offers credit risk tips
The Global Association of Risk Professionals (GARP) recommends that companies create accurate credit models that give a better idea of the different risks associated with each country with which they intend to do business. GARP also explained a distinction between credit risk and market risk, which is important to segregate when formulating a strategy. Assessments of credit risk should be simultaneously broad and precise, as both annual trends and specific instances need to be taken into account prior to financial and product exchanges. GARP added that the five c's of credit - capital, capacity, conditions, collateral and character - should all be considered when conducting research of new markets.
