Crisis Management Versus Risk Management

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As crisis events in our industry continually demonstrate, a good risk management process at origination of any trade finance deal is the best way to minimize loss when problems arise. Good crisis management is essential, but never a substitute for daily risk management processes.

Moreover, risk management processes should apply to all customers, although depth and detail may depend on the transaction and customer. Transactions involving credit or other types of financial risk should incorporate a risk management process.

A transaction's risk management process should focus on five areas:

Knowledge of your client company and product
Knowledge of your customer/underwriting
Structure and documentation
External risk mitigation/portfolio management
Crisis management

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