Our client traded commodity physical instruments and financial derivatives that made up a complex portfolio and position. The credit department found their current credit reporting to be inaccurate and not always very useful when assessing their credit exposure. Because of inaccurate reporting, the client may have been exceeding credit limits without knowing.
MidDel’s consultant determined that reporting in their risk system was written inaccurately, resulting in missing trades and incorrect valuations of certain positions. The consultant then diagnosed the issues and developed a plan to re-engineer the credit reporting process. Each vendor position was analyzed for errors to ensure a comprehensive fix. The credit reports were re-written with new logic and tools were developed to allow the business to access the data more efficiently and timely.
Accurate credit reporting reduced the client’s credit risk exposure. With better credit reporting, the client had better information to develop more accurate credit limits and management had more confidence the front office was trading within their credit limits.