Mastering Credit Risk Analysis Post-Pandemic World
Once again, the East of England branch were joined by Andy Moylan FCICM, an experienced credit professional from Allianz.
Unraveling Challenges and Opportunities in Credit Management
In his insightful presentation, Andy unveiled a compelling narrative of the current economic terrain, which he aptly termed the "Perfect Storm." This confluence represents the worst recession in living memory, coupled with the impending deluge of insolvencies that will follow once pandemic-related restrictions on recoveries are lifted. It's indeed a formidable challenge, but Andy illuminated the silver lining, revealing the hidden opportunities within, and how Credit Management is at the heart of it all.
For businesses currently in survival mode, this period presents a unique set of challenges but also a promising window for those daring enough to embrace calculated risks in pursuit of growth. Andy underscored the pivotal role of the credit manager in these times and how their expertise in Credit Management plays a crucial part in navigating these challenges.
Credit Risk Analysis Beyond Cash Collection
One crucial takeaway from Andy's presentation was the necessity of transcending reliance on past payment performance. To effectively navigate the evolving landscape of credit risk, a more comprehensive approach is imperative. It's no longer sufficient to merely understand your customer; you must also delve into the intricacies of their customer base. In this dynamic environment, credit managers must harness not only financial data but also a wealth of other information to make well-informed decisions, a testament to the integral role Credit Management plays in risk assessment.
Expanding Your Credit Risk Analysis Toolkit
While credit insurance provides a level of security, it's not a one-size-fits-all solution. To venture into more uncertain territories and take calculated risks, a nuanced understanding of margins is essential. Andy's insights highlighted the fact that after a recession, instances of fraud tend to escalate, especially in sectors like food, meat, fruit, vegetables, and IT.
Consequently, he advocated for a fresh and innovative approach. This involves formulating a well-considered risk strategy and assembling a versatile toolbox tailored to your specific needs, a key element of effective Credit Management. Each customer should be diligently graded based on their risk level, aligning their external credit rating with your internal margins and collection methods. In the case of higher-risk customers, shorter payment terms and potentially higher margins may be in order. Remember, the same rules apply, it is crucial that you know your customer to minimise risk and potenital bad debt.
Paving the Way for a New Era
In a world forever altered by the pandemic, Andy's parting words resonated deeply. He encouraged us all to carve a path of renewal, a risk strategy that is forward-thinking and comprehensive. It's about intelligently grading customers based on their creditworthiness and adapting your approach accordingly, a progressive approach that ties the evolving landscape of Credit Management into the changing world of Credit Risk Analysis.
We hope that you found Andy's insights as illuminating as we did. His webinar was not just informative; it was an engaging journey into the realm of post-pandemic Credit Risk Analysis, an integral part of modern Credit Management. The session was marked by dynamic interactions, with Andy addressing a multitude of questions from an attentive audience.
As we move forward into the uncharted territory of post-pandemic recovery, we will bear in mind Andy's wise counsel. In these challenging times, it's no longer sufficient to merely survive; we must thrive. To achieve this, we must sharpen our understanding of risk, adapt our strategies, and boldly embrace the opportunities that lie ahead. The new dawn beckons, and it's time to seize it with open arms as we master the art of Credit Risk Analysis in the post-pandemic world.