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Profit is the Reward of Risk

It has been said that profit is the reward of risk. Every decision an employee of a financial institution makes involves some degree of risk—it is unavoidable and not within the direct control of the financial institution. However, assessing the risk and incorporating the risk level as part of the decision process is an integral part of doing business.

With an economic downturn and market saturation, financial service institutions may find themselves in an increasingly competitive and challenging marketplace. Strong risk management practices are a critical driver of profit and, in some cases, have proven to be the difference between a company posting a profit or a loss. While managing risk is a core competency for many financial organizations, there is room for improvement in most. Risk management can take many shapes, including new account credit policies, high risk account management, collections strategies, pricing and authorization policies.

The fact that risk management is critical is not in question. However, the question to be answered is what impact it can have on profit. Download the vision and strategy white paper Profit is the Reward of Risk to learn about several strategies to utilize risk management as a profit driver.

Category: Credit