Commercial Finance Brokers: Understanding Risk Management

Trade finance brokers are laden with a huge amount of responsibility when it comes to choosing the correct avenue of financing for their customers. Every morsel of advice given to customers could either lead to a road of success or come back to bite you. So the importance of risk management is pretty substantial in any case.

Risk management tips

If you are the CEO of a commercial finance company, not only does the ability to identify risks help you protect your customer’s assets, but it will also protect your business from ugly legal upshots. Trade finance risk management is all about covering your team, as well as giving your customer the best possible chance to survive or grow within their industry / market.

Professional Liability Insurance

Business insurance is essential to any business, no matter what product / service they offer, to whom, how, and where. Without insurance, your business is not protected. For the finance industry, lawyers, accountants, real estate agents and brokers – or any figure who provides professional advice – there is something known as Professional Liability Insurance which is an extension for what General Liability Insurance does not cover.

If your team provides advice to business owners, MDs or business shareholders of any kind, they could be in jeopardy of negligence claims should a case turn sour. Not only is it important to train your financial advisors, but it’s just as critical to have liability cover in place before you practice.

Get the Right Training for Risk Management

Risk management is a vital part of running any company but even more so for one which works so closely with other businesses. Trade finance is a funding avenue for businesses of all sizes, and can help to finance the movement of goods in transit without damaging a company’s cash flow. This funding can be payments to the supplier, revolvers or letters of credit – but before a broker can approve an application, they need to look at the risks.

Risks can be looked at through three key areas; micro risks, macro risks and product risks. Within these three core areas, the financial advisor needs to understand what needs to be reviewed. Micro risks are conducted at individual customer level and some of this may be discretionary but macro risks look at the wider measures, such as risks within certain countries, fraud risks, bank risks, or the risks involved with foreign exchange.

Failure to manage these risks properly can lead to complications if the borrower is unable to abide by the contract or is unable to afford repayments. So getting the right training is essential to the success of your business and that of your customers.

In-House or Public Training Courses

When it comes to training your team, there are two routes you can take. In-house training is a fantastic option if you have a relatively large team and you want to offer a consistent, tightly managed training program. But if you’re a small broker, another option is to out-source an expert instructor who can provide a full syllabus with affordable pricing structures. Alternatively, there are also many public training courses available if you make a search in your chosen area.

Reputable companies, such as training specialists Redcliffe Training, can usually offer a number of training options to suit your business requirements. So whether you want to send team members to a public course off-site or you want qualified trainers to come to teach on your premises, you will not be short of options.


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