Supply Chain Credit Risk

Global supply chains have become increasingly complex, and supply chain risk management (“SCRM”) is a major issue for most large corporates.

Globalization of trade flows means that SCRM increasingly features in trans-national trade discussions.  For example, a key issue in the current Brexit negotiations is the complexity of the supply chain across the UK and Continental Europe; some larger product sub-assemblies contain components which have repeatedly crossed borders during the manufacturing process. This is one of the main reasons that the EU is keen for the UK to stay within the Customs Union.

The development of “Just-in-Time” production processes began in the 1980s; it has squeezed working capital costs to a minimum and reduced the risk of overstocking.  Supply chains are leaner and more agile as a result, but they are also potentially longer and more fragile.

This paper looks at some of the largest global corporations and uses bank-sourced data to assess the level and distribution of credit risks across their supply chains.

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    Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.