20 March 2024
Learn how our credit assessment team in Middle East tracks the financial stability of your commercial partners, enabling you to trade with confidence.
Summary
Key Takeaways
- Understanding creditworthiness of your trading partners is critical among market uncertainties and several ongoing pocket of risks.
- Allianz Trade Analysts capture and assess via a top down approach, public but mainly critical proprietary information to board and monitor credit insurance coverage granted.
- Specific skillset of risk team supported by risk management models to support our policyholders securing profitable growth and protecting cash flows.
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Credit assessment teams: gathering intelligence that empowers your business
Having a clear picture of the creditworthiness of your close trading partners, is a business fundamental. And in today’s uncertain economic conditions, gaining that understanding is more important – and more challenging – than ever, whether for domestic or your export markets.
Whether your client is a local specialist or a multinational, our credit assessment experts draw on an unrivalled set of information sources, C-suite engagements and advanced technologies to analyse and set accurate credit levels for the companies you work with – enabling you to trade with them with confidence.
To showcase our comprehensive approach, we asked Mehdi Mourad, Head of Credit Assessment & Sensitive Risk , and Lavangika Mathur, Senior Credit Assessor from Allianz Trade in Middle East, to outline how their complementary roles support your business with actionable insights
Credit assessment: the engine of trade credit insurance
Setting the right rating/grade for a specific company subject to credit insurance coverage assessment is a critical step in our industry. The grade set the risk category for every company, indicates the credit risk appetite and pricing and also at global portfolio level steer our risk strategy. Hence having a certain level of right information on companies assessed is critical. As Head of Credit Assessment & Sensitive Risk at Allianz Trade Middle East, my primary role is to make sure that we capture and analyze the best available business data on companies in countries under our regional scope. To ultimately provide our clients the insight they need to adjust their credit policies, protect their receivables and profitably grow.
This data sourced and used by our credit analysts, also feeds our artificial intelligence credit assessment models. The more data we have on companies, and the better its quality and sophistication, the more informed credit risk coverage we are able extend to customers.
To achieve that particularly in our region where financials disclosure is limited, we source data (our proprietary information) by our local analysts experts in local markets via direct contacts with companies and via our information providers and local network too. Mehdi outlines.
The final grade scalling from 1-10 is an end result of a top down, forward-looking approach factoring our country and sector risk ratings and related stance and the important final part of subgrades analysis covering character assessment, positioning of the company within its value chain, revenues and profitability, liquidity & financial leverage, cash flows and coverage. Additional information added related to payment record, scoring with local credit bureau if available.
In case no financials disclosure, a non-standard approach apply factoring several cross checkings and in this case local expertise and direct contact outcomes are critical in the final grade decision.
The key is proximity to the companies we assess. Each market is different so information availability will vary from one country to the other. It is crucial for us to have a tailor-made approach based on our strategy for each market and each pocket of credit risk. . Mehdi explains.
Credit assessment team ensure analysis of newly boarded risk and exposure but also in charge of monitoring this exposure and companies/group performances as long as the credit limits are utilized by policyholders. Dynamic monitoring and specific approach for the high risk managed under our local sensitive risk unit.
Credit analyst: a vital role
“Credit analysts are a lot like business reporters,” says Lavangika. “We gather intelligence and perform detailed analysis on companies that our customers do business with. That allows us to determine their creditworthiness based on their strategy, their financials, the sector they operate in and a whole variety of factors. This work is the foundation for the core service that we provide as a business: by assessing the risk thoroughly, we can make the best decisions on credit limits and therefore deliver a service that best protects and supports our customers’ activities.”
A key characteristic of the credit analyst’s job is their work is primarily with your clients. “Like a business reporter, it means interviewing companies, diving into their operations, strategy and finances, pulling together information from the best available sources on that company, doing lots of interviews, asking the right questions and then delivering an independent robust assessment. So you have to be curious and like intellectual challenges, questioning what we are told and forming our own judgment,” Lavangika explains.
First and foremost, this means cooperating with the companies being assessed and establishing a dialogue with their senior finance executives – often the best way to get access to prime information. But that challenge varies. “One day you could be dealing with a company that’s publicly traded and whose finances are completely transparent; the next day a private, family-run business that is not required to publicly disclose any of their numbers. But, if we are going to serve our customers’ interests, we still have to form an accurate picture of the credit risk they might be exposed to,” says Lavangika.
Gaining the desired confidence with companies under assessment is natural because getting financing through payment terms is key. By cooperating, they are able to establish the best credit scoring from us, which allows them to be a trusted commercial partner to you, their suppliers.
Applying the best skillsets
Given the scope of the challenge, the skillset that credit analysts need to bring to the role is highly strategic.
“Our credit analysts need to get under the skin of CFOs and understand whether companies are pursuing the right strategy. They are experts in analyzing companies in their territory and actively monitor the dynamics of the country or region they’re covering for developments that might impact risk decisions. It is key they understand the culture and business environment of the companies they are assessing,” says Mehdi.
“That focus of analysts on local markets in the GCC is a key differentiator for Allianz Trade in Middle East,” he says. Our teams are also very close to our customers’ clients.
Along with analytical expertise, the role also requires strong communication and people skills. “The ability to win the trust of executives at the company you’re assessing is critical because you’re often asking them to share proprietary, company-confidential information,” says Mehdi.
On the data sourcing and models side, there is a slightly different but complementary set of competencies. “My team’s skills are in data management, analysis and a deep knowledge of data sources. They know the fast-evolving data market of the region and keep pace with its trade and evolutions, with the type of data being opened or how to connect to providers,” says Mehdi.
Ensuring access to the most accurate sources of information and the best models for analysis and decision-making also demands some cross-functional capabilities. “When it comes to data sourcing, a key challenge is to ensure we meet business needs and technical possibilities. So, there is an arbitration element to the role that requires negotiation skills and a positive attitude to problem-solving,” explains Mehdi.
That commitment to comprehensive coverage, cooperation and innovation ripples through our whole operation, from the starting point of credit analysis to policy renewal. “The better the credit assessment, the greater our understanding of risk. The higher the number of credit limit requests we can accept, the more we support customers and help them grow “says Mehdi.
Our expertise and commitment
Allianz Trade is the global leader intrade credit insurance and credit management, offering tailored solutions to mitigate the risks associated with bad debt, thereby ensuring the financial stability of businesses. Our products and services help companies with risk management,cash flow management, accounts receivables protection, Surety bonds, business fraud Insurance, debt collection processes and e-commerce credit insurance ensuring the financial resilience for our client’s businesses. Our expertise in risk mitigation and finance positions us as trusted advisors, enabling businesses aspiring for global success to expand into international markets with confidence.
Our business is built on supporting relationships between people and organizations, relationships that extend across frontiers of all kinds - geographical, financial, industrial, and more. We are constantly aware that our work has an impact on the communities we serve and that we have a duty to help and support others. At Allianz Trade, we are strongly committed to fairness for all without discrimination, among our own people and in our many relationships with those outside our business.