The primary risks that the underwriting teams are required to evaluate are the risks of non-payment or insolvency. But there is an enormous range of risks that can affect companies and their ability to meet payment obligations.
The risks can range from macroeconomic trends such as regulatory changes, market risks or political challenges, to microeconomic risks like operational, liquidity or credit risks. But other factors also constitute a threat to the financial stability of a company such as strategic or reputational risks, as well as extraordinary risks, linked to natural phenomena, which can be frequent in some regions of the world.
According to Jason, analysis of a company may involve financial ratio analysis, discussions with the company management team to assess its strategy, ownership and management, and an assessment of the resilience of the business. Concretely, the idea is to identify what may threaten the assets and viability of a company, predict future events that present risks, and calculate the financial impact these risks could have.
“My team is primarily dealing with complex groups and a number of distressed scenarios, which require bespoke credit risk solutions,” says Jason. “What we bring to the customer is better-informed decisions and a trusted partner they can discuss with.”
For Federico, whose role is dedicated to exports, it is important to understand the political situations in countries across the globe. He says: “It is my responsibility to understand what is going on in countries in the world. It requires continual effort to try to anticipate future scenarios and what challenges these might present for our customers.”
Much of this ability comes down to depth of experience. As Jason explains: “A risk analyst who has been reviewing information, speaking to customers’ clients and doing complex credit analyses for a number of years, starts to build up an intuition of where something might not be quite right. But it’s still very much built on the basis of data, research and investigation, speaking to clients and doing detailed financial analysis.”