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Staying on course by effectively managing risk

September 25, 2013 by Gary Stockton


In part three of our five-part blog series, a voyage of the customer life cycle, we examined guarding against Fraudsters. This week we will dive in to managing risk.


As credit managers, you’re safely out of port on your metaphorical voyage to greater profitability. At least for the moment, the wind is in your sails and the water is calm. But how do you know if there are any squalls ahead that might veer you off course or even sink your ship? Just as navigation is one of the most crucial tasks for mariners, it’s also an imperative for credit managers who want to stay afloat through challenging economic straits.

Most often, the need to make credit decisions is prompted by any situation that requires a credit manager to evaluate and decide how best to proceed with a customer. To assist in this process, they can receive services that provide customer updates quarterly, or they can receive ongoing “triggers” from changing customer files. Triggers provide continual updates on both potentially damaging as well as positive commercial activity. Some credit managers receive updates and triggers that evaluate the personal credit report of prospective customers only. Others stick with strictly a commercial evaluation.

For businesses focusing on the small business market, there are definite advantages to blending the very latest consumer data with current commercial data on the business, a key differentiator offered by Experian.

Staying shipshape:
As the more information fed into a scoring model, the more predictive it will be, a best practice is to receive and evaluate blended data that takes into consideration the history of both the business and the business owner.

Experian’s research shows that blended scores—which include both personal and business data—capture 46 percent more small-business deterioration than commercial data alone.

From the logbook:
Experian supported a client whose goal was to increase credit account approvals without incurring an increase in loss ratios. Previously, the client had been evaluating customers utilizing consumer data alone. The recommendation to use blended scores helped to reduce the cost per application by 11 percent, increased their ability to more accurately determine an appropriate credit risk cutoff, and ultimately increased approval rates by nine percent.

Download our whitepaper!

Experian Business Information Services recently published an informative whitepaper titled “Rekindling Success: Uncovering your portfolio’s hidden potential using advanced triggers to prevent risk.” The whitepaper examines the results of a three month study conducted by Experian’s Decision Sciences team to assess the performance of more than 16 million commercial triggers. The whitepaper analyzes the most predictive triggers, and provides recommendations for increasing portfolio-monitoring performance for optimum profits.

Is your business navigating rough seas in search of credit excellence? You might consider reaching out to Experian’s Global Consulting Practice. This group provides clients with exceptional strategic credit risk management insight, detailed enhancement opportunities, and deployment strategies.

By using all of the tools available to help them make more informed credit decisions – and thus increasing profits while mitigating risk – credit managers can steer through rough seas and arrive safely at port.

We always love to know what you’re thinking, so please send us your comments or questions below or send us a message on Twitter @experian_b2b.

For more information about Experian’s advanced business-to-business products and services, please visit www.experian.com/b2b.

Managing the Customer Lifecycle

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