Willis Towers Watson launches new trade credit risk & analytics model
Global broker Willis Towers Watson (WTW) has launched a new data-driven risk and analytics model for the trade credit insurance market that analyses clients’ trade receivables to predict potential losses over a range of statistical scenarios.
The model is designed for both new entrants to trade credit insurance as well as established players. These include private business-to-business forms trading on open account terms; financial institutions evaluating receivables connected to a borrowing base, receivables purchase programme or securitisation; and merger and acquisition activity to evaluate the risk within a target company’s receivables asset.
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; and a fully customisable credit insurance Return on Investment (ROI) calculations examining the cost of premiums against sales and projected losses.
WTW said 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.
Scott Ettien, executive director Willis Towers Watson, commented: “ WTW has a long track record of success in using our R&A platforms to drive additional lines of business by bringing a data-backed analysis to our client’s attention. Our model helps organisations to understand further how Trade Credit insurance can be viewed as a viable risk transfer vehicle for capital substitution.”
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