MARSH: Companies that manage their risks better can avoid the effects of the financial crisis
 The crisis that the global financial markets are facing brings along with it a
change of the risks a company is exposed to. Covering the new risks can be achieved
only through a good management of the companies' capacity to improve liquidity and
to reduce the costs of insurance and of risk management. In this context,
maximizing the value of trade credit insurance, and the companies considering other
forms of insurance, represent only two of the recommendations of MARSH, the
world leader on the market of risk consultancy and insurance brokerage.
"Most business people are very aware that the prices of oil, food and
other consumer goods push the prices up, but at the same time the credit crisis
is pushing the demand down. Companies should know that there are some simple
steps to follow regarding insurance and risk management. They can issue a
volume of liquidities so necessary in
this period. Insurance may be used to facilitate obtaining loans or lower
credit costs", Cristian FUGACIU,
General Manager MARSH Romania, explains.
The most recent study conducted by MARSH, entitled "Improving
working capital
and
business resilience",
provides details on how to free up working capital by reducing the costs of insurance
and risk management, while covering the new-appeared risks, such as lack of liquidity
of the suppliers or increased costs of production and transport.
Thus,
the cost of insurance should be considered an investment and not an expense,
and MARSH recommends a thorough risk analysis of the companies, which could
significantly reduce the insurance costs and, at the same time, could provide
the necessary protection in a period of crisis.
Also, the MARSH study indicates that "trade credit insurance can be extremely valuable in this period of crisis, providing protection against high-risk debts. By filing a generous policy for a trade credit to the lending bank, the companies can obtain a more generous credit or better loan conditions".
Another recommendation suggests that companies should reconsider the forms of
insurance they use. "A detailed analysis and a renegotiation with the
insurer can bring up innovative forms of insurance, that would produce savings
and coverage of new risks. Obtaining surety bond guarantees from the insurers
could stimulate credits from the profile institutions", the
international insurance broker notes.
So, in a period like the one in which we find ourselves now, it is extremely
important for a company to review its exposure to risks, its impact and
emergency plans, especially in the context in which, in the present situation,
a higher and higher importance is given to the ratings of the specialized
agencies. STANDARD & POOR's, for example, announced it will introduce a new
criterion in its analysis, related to the risk management programs of the
companies, a reason for any manager to analyze closely the risks that the
company he manages is exposed to, MARSH explains.
Author: Andreea IONETE
on 30.10.2008
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