Survey: It's a Riskier World
A survey carried out by four finance professors (out of 1100 finance executives worldwide) from the Johns Hopkins's School of Advanced International Studies, Duke University's Fuqua School of Business, and the Wharton School at the University of Pennsylvania, found that interest-rate risk, followed by foreign-exchange risk and credit risk topped their list of concerns. 70% of the respondents said that credit-risk levels have increased in their businesses since 2006.
In addressing credit risk, many financial executives rely on internal controls such as credit rating, placing caps on exposure to any single party or requiring collateral or loan guarantees. Such controls can sometimes be unreliable (credit ratings) or increase the cost of trading e.g. requiring collateral from customers can often make businesses uncompetitive.
In contrast, fewer than 20% of respondents use credit-default swaps, credit insurance or total-return swaps to hedge their credit risk. Bartlett provides a range of solutions to address credit risk, including credit insurance for both customer and supplier default, as well as a range of bonds and other trade finance solutions. Credit policies are typically written on a total sales basis, but they can be tailored to cover key accounts or just a specific customer. The process starts with a thorough review of your credit management procedures and an in-depth discussion about your precise requirements. The same team is responsible for establishing an appropriate insurance program and providing ongoing support, ensuring focus and consistency throughout the relationship.
For more information contact Andy Parfitt in our Credit Department.