A survey of energy and commodity executives found that 70% of companies are using spreadsheets or internally assembled systems to manage counterparty credit risk, according to Triple Point Technology. In recent years companies have put off investing IT dollars in credit risk technology in favour of front-office systems. However, with the global credit crisis, commodity price volatility and an increased focus on liquidity management, companies are re-evaluating their credit risk systems and processes.
In fact, 60% of the companies surveyed felt the need to upgrade their credit risk systems to effectively manage counterparty risk in the current business environment. Companies using spreadsheets and disparate in-house systems find it difficult to accurately measure portfolio exposure and manage credit limits across multiple business lines and commodities, while manual processes are labour-intensive and error-prone.
“In the midst of rapidly tightening credit conditions, never has it been clearer that companies using spreadsheets to manage credit risk are courting disaster,” said Dan Reid, vice president, credit risk solutions, Triple Point Technology. “That 60% of the companies surveyed acknowledge the need to invest in a robust enterprise system to manage counterparty risk is a great step in the right direction.”
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