Adapting to a new credit and supplier risk environment

Bureau van Dijk’s virtual thought leadership event on 10 November 2020 explored ‘Contemporary Approaches to Credit and Supplier Risk Management’.

The event provided a space to share knowledge on the benefits of varying methods people are using to tackle common challenges in innovative, contemporary ways, including using Bureau van Dijk products to automate their risk assessment and integrate Orbis data into their workflow.

Mark Zandi, Moody’s Analytics Chief Economist, assessed the likely pace of economic recovery in the next 12 months and the impact of the recent US election, while touching on potential risks to a positive economic outcome.

Catch up on the presentations and panel discussions with leading credit and supplier risk experts to learn more about how they are adapting to today’s environment and what they believe the future holds.

We’ve summarised some of the most interesting discussions below, but the event is available on-demand until 11 December 2020, so click here to catch up on what you missed.

Keynote: the Global Economic Outlook for 2021

- Mark Zandi, Chief Economist at Moody’s Analytics

Chief Economist Mark Zandi led us through the likely near-future economic scenario, articulating risks and possible areas of recovery. He argued that there is no evidence for a V-shaped recovery; instead predicting a modest, slow improvement with diverging ‘K-shaped’ pathways for differently affected sectors.

Tourism, for instance, will recover relatively quickly but we may see a sizeable reduction in business travel, impacted by the growing ability to work from anywhere, he suggested.

Zandi highlighted the variation between both geographies and demographics, with people from lower income backgrounds and lower levels of education likely to suffer the most sustained economic impact from Covid-19.

The recent recovery we have seen could easily be undermined by further shocks, he cautioned, suggesting it may be necessary to extend the aggressively supportive fiscal policy we have experienced.

“There is a genuine risk of policymakers taking their foot off the fiscal support pedal too quickly. It would be a mistake to go from fiscal support to fiscal austerity too quickly.”

Managing ESG risk in your supply chain

- Andrea Blackman, Moody’s Group Head of Global ESG

“If your suppliers understand your priorities, you can work together towards your firm’s strategic objectives. Together, you can collectively adapt and position yourself for the future,” said Andrea Blackman.

Blackman highlighted emerging regulation and increased investor and consumer scrutiny in supply chain management, explaining that value chains are often complex and globally dispersed with ESG interdependencies throughout.

Using case studies to highlight how ESG supply chain issues impact firms’ reputation and value, Blackman argued for sustainability at the heart of an overall investment programme, articulated early on with clear, measurable objectives in mind, rather than retrospectively managing ESG.

The Metso Outotec story – transforming the credit risk function

- Peter Maiolo, Metso Outotec’s Global Process Owner for Accounts Receivable

“Bureau van Dijk is acting as a partner to the business in the way we move forward,” said Maiolo. He described the challenges his firm faced with local finance teams, using more than 20 different customer credit companies to source customer credit analysis.

With the organization being active in so many different countries, coupled with a high level of divergence in the methodologies of these different providers, any attempts to assess risk on a consistent level were greatly inhibited.

Bureau van Dijk’s partnership with Metso Outosec was initiated with an intimate nine-month proof-of-concept programme, with the two companies working to build an operational system from the ground up. On-time and under-budget, the full system was implemented in a three-month operation.

Transforming the credit risk function to enable business growth: a case study

- Pia Porvari, Director of UPM Customer Operations in Finance; and Jarno Saario, Credit Director

Porvari and Saario discussed UPM’s transition over recent years in terms of managing credit risk: “After the 2008 financial crash, it became evident that we needed a model with credit risk tools capable of managing the risk portfolio proactively rather than reactively. Before partnering with Bureau van Dijk, UPM assessed all its customers with the same process and used a number of different service providers in the field, limiting the potential for any global, standardized view of their customer portfolios.

For Povari, UPM’s transition has been most visible in the shift from the chaos of paper documentation and multiple different systems and processes to a streamlined, automated service.

The impact of Covid-19 on the credit risk function

- David Payne, EMEA Accounts Receivable Manager for RS Components

David Payne discussed how different countries’ experiences of the spread of Covid-19 at varying times and with diverse responses has been challenging for his international firm.

He described how collections were initially delayed as the widespread shift to homeworking led to a lack of reliable communication with clients.

“We worked closely with sales in every market, finding alternative contacts and ascertaining how business have been affected,” he stated.

He attributed the success of RS’s response to a close engagement with the sales team and a sharper focus on data-based predictions and forecasts.