Risk Transformation: Why Automated Decisioning is a Game Changer

Finance professionals are under constant pressure to make the right credit risk decisions quickly and consistently. Managing portfolios often against a backdrop of increasing market volatility and complexity, while attempting to capture the highest levels of accuracy is a challenge. 

Here, we look at how automated credit risk decisions help optimise the underwriting function. And why the technology is no longer a ‘nice to have’ but could be a strategic advantage over your competitors.

What are automated credit decisions? 

Automated credit decisions are assessments of a customer’s creditworthiness using specially developed technology and with minimal human intervention. These automated assessments are powered through D&B’s proprietary data and analytics.

The process can be broken down to three distinct components:

• Data, access to D&B's global data cloud provides all the information needed to support a decision.

• Analytics, using D&B's pre-defined scores and/or custom analytics for tailored strategies to your business risk appetite. 

• Decision engine (technology), where the analytically derived logic is deployed within a decisioning workflow.

The decision engine is a core component in ensuring accurate credit decisions are made on an ongoing basis. This helps better deal with volatility and complexity, leveraging D&B’s data sources, insights and advanced analytics, enabling optimisation of risk strategies over time.

Automated credit decisions are particularly valuable when assessing new customers, re-evaluating terms or limits for existing clients and managing multiple low-risk accounts. This allows for resources to be redeployed to deal with high risk and/or marginal business deals. 

While this may initially feel like a ‘black box’ to many professionals, it actually increases the levels of oversight and governance within the risk function.

Why automation matters now more than ever 

Things move quickly and businesses need tools to overcome a wide range of challenges. For example, recent trade tariffs have led to uncertainty in supply chains, causing risk profiles to change quickly and dramatically. 

The tough economic times we live in lead to increased late payments and a need for credit teams to be more adaptable and responsive, all while facing existing business cost challenges.

Automation leads to better informed decisions being made faster. D&B’s curated and proprietary data sources can be brought in to unearth hidden risks and quickly. The benefits are two-fold, as decision engines can safeguard businesses during turbulent times and help them to capitalise on emerging opportunities when things look more optimistic.

But the benefits don’t stop there, streamlined credit assessments are vital to help maintain high customer satisfaction levels, ensuring there are minimal delays and bottlenecks.

By using a data-driven approach, credit teams can review and adjust their risk appetite. The ‘always learning’ approach helps finance professionals to understand the implications of their policies, in a timely and measured way. 

The business benefits of optimised credit decisioning 

Automated credit decisions bring many advantages:

• Speedy decisions

  Automated credit assessments cut decision times from days to seconds. 

• Consistent assessments

  Decision engines remove human bias from credit assessments for more reliable results. 

• Happy clients

  When applications are processed quickly, clients are happy.

• Transparent 

  Automation helps to create clear audit trails and records of data and rules used. 

• Efficient workflows

  By leaving mundane tasks to decision engines, underwriters can dedicate their time to the tasks that matter most.

• Improved risk management

  Automation allows credit teams to balance risk and reward to support profitable growth.

   

How data plays a role in advanced credit risk analysis  

Automated credit decisions are only as good as the data behind them.  

Annually submitted financial details are useful but having a view of the last time a business missed a payment, or their average turnover in the last six months, can help credit teams to make better decisions.  

Are you considering automation and decisioning as strategy for your business? Get in touch with Ravi today and he will find a convenient time to connect.