Despite a solid risk management process, there will be problems because we cannot predict all crisis events and protect against them. Be prepared to deal with a crisis event and take action immediately — identifying and assessing issues and options and obtaining expert advice as needed.
Ensure that all exposures/ transactions with the problem party, industry or geography have been identified — whether as a direct or indirect counterparty, or as risk mitigation provider. In most cases, the best chance for minimizing loss is in the early stages of a crisis — or even before the crisis itself.
Get a legal opinion on the validity and enforceability of your documentation. Identify and contact parties, such as customers, government contacts or lobbyists, who may be able to provide assistance.
Again, know your own company's priorities and limits — for example, is it more important to avoid a financial loss, lengthy recovery battle or possible reputation impact? Does your company have the financial resources to pursue recovery over a long period and to employ whatever expert assistance is needed?
Good deal structure and documentation, as well as early identification of problems maximizes your ability to take action and potentially minimize financial loss. Ensuring that the right risk management processes are in place on a day-to-day basis is essential to managing through any crisis to the best possible outcome for you and your customer.