As history has shown us, getting credit risk wrong can result in reputational damage and ultimately financial ruin. Organizations that want to succeed today must make credit an enterprise level concern.
I recently talked to Fred Pacione, Director of Credit Risk and Marketing Treasury at Nexen Inc. about how they manage credit risk and the central role that Triple Point plays in this. Nexen takes an automated approach which crucially has the full support of senior management. Their credit risk strategy has four key elements:
- Holistic counterparty assessment
- Accurate view of exposure
- Credit risk prevention measures
- Credit risk reporting
A credit risk strategy must deliver these four elements and have the backing of management. Anything less could be perceived by shareholders as irresponsible. In short, organizations must abandon their spreadsheets and rudimentary systems and put in place a sophisticated, automated credit risk system. To learn more read the full article.