Credit Risk Analysis Road Map
Given the impact of the global financial crisis, leading players across industries are conducting a fundamental rethink of their credit risk analysis capabilities. The increased awareness of the seriousness and the variety of financial risks faced by organizations is the first step toward building a more robust credit risk analysis approach. But today in the realm of data and analytics there is much more to be done to be able to understand and effectively manage credit risks. Quantzig draws on its end-to-end transformational capabilities, as well as core strengths in financial risk analytics to help businesses to effectively address volatility while creating a sustainable competitive advantage.
The basic, building-block approach to credit risk analysis has proven to be effective across industries. However, one has to ensure the alignment of the foundational building blocks before the establishment of advanced analytic capabilities that support various levels of risk management activities. The primary steps are as follows:
- Define the credit risk appetite and limit
- Address management challenges around credit risk using better metrics
- Leverage advanced analytics to enhance the risk analysis process
- Include risk analysis on the organizational agenda
The client – a leading player in the U.S IT industry, that specializes in offering a range of information technology services designed for business productivity.
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Project Background and Solution Offered
The ongoing economic turbulence and the increasing regulatory pressures were the major reasons for credit risk analysis to move up the agenda of the management officials of the IT company. They sought to leverage financial risk analytics to improve their infrastructural and risk management capabilities. Also, the IT industry player wanted to leverage data analytics to make smarter decisions related to credit risks for which they approached Quantzig to leverage its expertise in financial risk assessment and deliver a real-time source of truth across all data categories, markets, and demographics to make stronger business decisions.
The client, a well-known player in the IT industry was looking at driving a competitive differentiation, by infusing risk awareness across the organization. They wanted to conduct a detailed credit risk analysis assessment to analyze and better understand the risk management capability to improve the overall performance and secure a competitive advantage. They wanted to conduct a credit risk assessment to see how analytics could help them analyze areas that needed to be monitored.
Value Delivered to the Client
The credit risk assessment aided the IT industry client to understand the importance of financial risk analysis and the crucial role it plays in the investment portfolios across the IT industry. A detailed credit risk analysis report proved to beneficial in developing precise strategies to avoid overexposing the investments to an asset class. It also enabled them to choose investments that have had relatively good upside performance. By better understanding their credit risk exposure level the IT industry client was able to effectively manage and diversify investment risks with substantial potential upside for their bottom line.