Credit Assessmentsome thoughts andRisk Management

Absence of Risk Management may diversify your portfolio!!Why Credit and Risk Management ?

So that all the risks are assumed by the respective parties that can best manage itAnd structure

Risk MatrixAcceptableUnacceptable

Controllableinternal action/monitormitigateUncontrollableTo take a view Insurance/Derivatives

Risk Management IndependentFocusedTop Management Support

Look for out of box solutions

Look into the fine printInsurance... do not leave it to the insurer

The Credit Assessment ChallengesGetting good data is relatively easyAssessing data involves more than just collecting informationAccurate interpretation of the data is the challengePerception of risk is the key.

Project Management would mean balancing of various risks.

It is important to identify each of themAnticipate Assess Control Mitigate

Do not get carried away by the presentation stylesAssessment need to look beyond the cover

Look Beyond Balance Sheets Market Reports are importantFinancials are importantbut not the last word

Look out for over ambitious plansAre the Plans Implementable ?

Assessment of Project Completion A realistic assessment of Project COD and implications of delay is important

There is no short cut to sustainable profitsAvoid Speculative Projects

Analysis of the future cash flow is important. Only they can keep the transaction afloatCash Flows are the key

Projections maybe misleadingAssumptions needs to be carefully examined

Treat your customers liberally, bearing in mind the fact that a Financial Institution prospers as its customers prosper,

BUT NEVER PERMIT THEM TO DICTATE YOUR POLICY

... is as important as Market SizeMarket Strategy...

A Formal Risk Control Trigger Points are essential

Insist upon the payment of all paper at maturity no matter whether you need the money or not ...

Invest in the right technology for the futureWatch out for obsolescence

Management of Documents is vital, particularly in difficult timesDocumentation

Documentation needs to be friendly but remember that in a financing transaction thats all you have

Read between the lines No room for ambiguity

a good deal is one where none of the parties alone has to assume full credit responsibility for the project, yet when the undertakings are combined, the equivalent of a satisfactory credit risk results for all the parties. effective risk allocation where all the risks are assumed by the party that can manage it within effective cost limits efficiently.

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