Commodity Management BlogInnovative Ideas and Thought Leadership for Volatile Commodity Marketplace
With J.P. Morgan’s recent $2 billion loss, financial risk is once again making headlines. It doesn’t look like this loss is going to cause systemic failure, but it serves as a prudent reminder that strong credit risk management systems and practices are vital to surviving today’s risky waters.
In a recent article in We Know Commodities, Dana Docherty and Amanda Lohec, Directors at Opportune, warn that “All too often, spreadsheets that are intended to be a stopgap measure become comfortable and are accepted as a long-term solution. Replacing those spreadsheets with Credit Management and Reporting (CMR) systems is critical to developing strong credit risk management capabilities.” In the article, they also share some important lessons learned from credit risk and reporting system implementations. The following are some lessons learned to ease the transition:
1. Understand your data environment
2. Review and document your current credit processes
3. Consider a modular approach
4. Carefully consider product enhancements
5. Manage your common data
6. Enforce good business processes
Beyond protecting you from losses, credit risk systems can help you better understand traders’ profitability – neither of which you can do with spreadsheets. Read more about Triple Point’s award-winning credit risk solution, Commodity XL for Credit Risk™.