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Understanding Your Portfolio’s Exposure

July 01, 2011 by Gary Stockton

Since fluctuations within the market or unexpected disasters can drastically impact your portfolio’s risk, it’s generally good practice to regularly review the level of exposure within your portfolio. Here are few evaluative questions you may want to consider:

  • What is your exposure roll up by parent company?
  • Do you have a high concentration of accounts by specific geographic locations that may be affected by common natural disasters?
  • What is your estimated potential loss by industry if there is a downward turn in the market?
  • Is there any noticeable credit limit or credit utilization trend within your portfolio?
  • What is your average level of risk relative to the number of delinquencies and your aged accounts?

Evaluating your portfolio and answering the questions posed above can help you find unexpected risk as well as find ways to grow your customer base in more diverse industries or locations.

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