Risk assessment when extending credit is a constant challenge for businesses due to the ever-evolving business landscape and constant introduction of new technologies. This means the nature of credit lifecycles is more dynamic than ever.
Efficiently and accurately assessing credit risk in today’s business environment involves the use of automation, ensuring data is clean and regularly updated, and considering unknown factors such as identifying the key beneficiaries of trusts.
Automation in credit risk monitoring
Credit Risk Monitoring is essentially an early warning system that keeps you abreast of changes in the risk profile of your customers and business partnerships.
Many businesses still employ manual reviews of their accounts to identify and assess which clients are the highest risk to the company.
- Most businesses have some form of risk check when on boarding new accounts
- Risk profiles of businesses can change at any time without warning
- Waiting until the business fails can result in exposure and loss to your business
- Employing risk monitoring enables the pre-emptive detection of high risk accounts months before a business fails
The use of automation technologies, like Lending Inteflow, can segment the most “at risk” accounts in your database via scoring, allowing you to focus resources on monitoring only them. Optimising assessment and monitoring procedures by employing automation means you no longer have to manually review your entire database periodically. This significantly reduces costs to your business, promotes efficient use of time and resources, while maintaining constant monitoring of your “at risk” clients.
Data quality/data cleansing
The quality and accuracy of account data requires constant maintenance and care. Lack of up to date account data makes monitoring and early detection of high risk accounts almost impossible.
As digital expands so too does the importance of data as a source of lead generation, customer relationship management and product sales.
Having your data routinely analysed and optimised is paramount to maintaining a quality data source and staying competitive.
The future of trusts data
One of the biggest challenges facing the business community is the growth of trusts and the identities of the beneficiaries behind them.
Not knowing who you’re doing business with puts your company at risk of breaching mandates including Anti-Money Laundering and Counter Terrorism Financing laws.
As the business community grows so to must our understanding of who our high risk accounts are, the quality and reliability of our databases and who we’re doing business with.