WTW launches new trade credit risk modelling tool
Willis Towers Watson has launched a new risk and analytics model for trade credit. The model analyses clients’ trade receivables to predict potential losses over a range of statistical scenarios.
The model provides 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; and a breakdown of risk exposures by sector and geography. Fully customisable credit insurance return on investment calculations examine the cost of Premiums against sales and projected losses.
By identifying the 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 solutions to grow sales confidently.
It is designed for both newcomers to trade credit insurance as well as seasoned users and is intended for a range of purposes: private business-to-business forms trading on open account terms, financial Institutions evaluating receivables connected to a borrowing base; receivables purchase program or securitisation; and merger and acquisition activity to assess the risk within a target company’s receivables asset.
Scott Ettien, executive director Willis Towers Watson, said: “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.”
