Shock Survey: 70% of Companies Still Use Spreadsheets, Internally Assembled Systems to Manage Credit Risk

06/04/2009

Triple Point Technology, a provider of SOA-based multi-market commodity and enterprise risk management software solutions, announced that according to its survey of energy and commodity executives, 70% of companies are using spreadsheets or internally assembled systems to manage counterparty credit risk.

ebizQ received the following:

In recent years companies have put off investing IT dollars in credit risk technology in favor of front-office systems. However, with the global credit crisis, commodity price volatility and an increased focus on liquidity management, companies are re-evaluating their credit risk systems and processes.

In fact, 60% of the companies surveyed felt the need to upgrade their credit risk systems to effectively manage counterparty risk in the current business environment. Companies using spreadsheets and disparate in-house systems find it difficult, if not impossible, to accurately measure portfolio exposure and manage credit limits across multiple business lines and commodities. Manual processes are labor-intensive and error-prone, leaving little time to focus on critical credit activities.

"In the midst of rapidly tightening credit conditions, never has it been clearer that companies using spreadsheets to manage credit risk are courting disaster," said Dan Reid, vice president, credit risk solutions, Triple Point Technology. "That 60% of the companies surveyed acknowledge the need to invest in a robust enterprise system to manage counterparty risk is a great step in the right direction."

Another key reason companies are looking to upgrade their current system is to improve their ability to manage master netting agreements and margining. There has been significant growth in the application and complexity of master netting agreements making it difficult to manage margin activity in a spreadsheet. Companies are looking to automate their ability to monitor inbound and outbound collateral obligations and utilize best-practice workflows to manage daily margin calls and disputes. Automated systems provide a competitive advantage and help companies quickly and accurately manage and report their liquidity with confidence.

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