Willis Towers Watson announced it has launched a new risk and analytics model for the trade credit market.
The model analyzes clients’ trade receivables to predict potential losses over a range of statistical scenarios. A typical model run covers:
- Rating and spread of risk on an aggregate portfolio, region, trade sector and individual buyer basis
- Probability of default loss forecasts on a portfolio basis
- Breakdown of risk exposures by sector and geography
- Fully customizable credit insurance return on investment (ROI) calculations examining the cost of premiums against sales and projected losses
By identifying the unique frequency and severity of potential credit risk losses within a firm’s receivables portfolio, the model takes a data driven approach to help clients design and structure the most appropriate solutions to help grow sales securely and with confidence, explained WTW.
The model has been designed as a tool for both newcomers to trade credit insurance as well as seasoned users including but not limited to:
- Private business-to-business forms trading on open account terms
- Financial institutions evaluating receivables connected to a borrowing base, receivables purchase program or securitization
- Merger and acquisition activity to evaluate the risk within a target company’s receivables asset
“Our model helps organizations to understand further how trade credit insurance can be viewed as a viable risk transfer vehicle for capital substitution,” commented Scott Ettien, executive director, Willis Towers Watson.
Topics Willis Towers Watson
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