Corporate focus on credit risk management

Non-financial corporates have tended to ignore their credit risk exposures. With the growth of the credit derivatives market, cost-effective solutions now exist to tackle this latest risk management frontier, says Stephen Stonberg, managing director and head of the risk transformation group at JP Morgan

Ask the chief executive of a non-financial corporate what his or her company is in business for, and you will get a lot of different answers. One answer you won’t get is “to take on the credit risk of our suppliers and business partners”, no more than they will cite interest rate or foreign exchange risk as core to their business.

However, unlike forex or interest rate risk, almost all companies outside the financial sector leave their credit risk exposures unmanaged, thus breaking