Credit, Liquidity and Market Risk

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1. 1

   How the Three Financial Risks Connect

   • How Credit, Liquidity and Market Risk Feed Each Other
   • Mapping a Company’s Financial Risk Exposures
   • Turning Risk Appetite into Treasury and Credit Limits
   • Roles and Governance: Sales, Credit Control, Treasury and the Board
2. 2

   Measuring Financial Risk Exposure

   • Exposure, Probability of Default and Loss Given Default
   • Sensitivity Analysis: One Variable at a Time
   • Scenario Analysis and Stress Testing
   • Value at Risk: The Idea, a Worked Example and Its Limits
3. 3

   Customer Credit Assessment and Limits

   • Applying the 5 Cs to a Customer’s Financial Statements
   • Payment History, Trade References and Credit Reports
   • Practical Credit Scoring
   • Setting Credit Limits and Payment Terms
4. 4

   Protecting, Collecting and Provisioning Receivables

   • Security, Guarantees and Credit Insurance
   • Monitoring Receivables: Ageing, DSO and Warning Signs
   • Collections Escalation and Disputed Invoices
   • Expected Credit Loss Under IFRS 9: The Provision Matrix
   • Concentration, Counterparty and Supplier Credit Risk
5. 5

   Liquidity Risk Management

   • Building a 13-Week Direct Cash Forecast
   • Liquidity Buffers and Funding Sources
   • Covenant Headroom and Early-Warning Indicators
   • Contingency Funding Plans and Working-Capital Levers
6. 6

   Market Risk: Exposures and Hedging

   • Foreign-Exchange Exposure: Transaction, Translation and Economic
   • Interest-Rate Exposure and Islamic Finance Alternatives
   • Commodity Price Exposure
   • Natural Hedges First
   • Forwards, Swaps, Options and the Hedge Policy
7. 7

   Integration, Reporting and Judgement

   • Key Risk Indicators and Reporting to the Board
   • Writing a Treasury and Credit Policy
   • Integrated Case: A Customer Failure Becomes a Cash Squeeze
   • Integrated Case: A Currency and Commodity Shock