Credit Managers are employed across multiple industries but are especially important for financial institutions. They have a variety of duties within an organisation while being primarily concerned with avoiding loss and bad debt. Larger organisations may have a credit risk department that is led by a credit risk manager.
If you’re looking to hire a credit risk manager, or are one yourself and looking to upskill, here are Red Flag Alert’s top ten essential skills needed for credit risk managers to excel in their role:
Credit risk managers perform crucial activities to protect your businesses from risks such as financial crime or bad debt. Below, we’ve split credit risk managers’ day-to-day responsibilities into sections. These may change between sectors and organisations; however, typically the role of a credit risk manager is relatively consistent.
Credit research initiatives analyse risk to alleviate prospective losses and find chances for credit investment, risk management, and other opportunities. These may then be used to predict the risk involved with individuals and organisations.
Credit risk managers oversee these processes and conduct research on industries, individual borrowers, and countries in specific company portfolios that have been flagged for potential risk. They will undertake customer due diligence by meeting, calling, or visiting customers, checking any important documentation, and will prepare and present reports for due diligence activities.
One of the biggest responsibilities of credit risk managers has been to analyse credit applications to determine risk and give recommendations. They not only assess credit risk applications but also:
A risk committee usually includes executives/executive managers, as well as the credit risk manager. They share knowledge of credit portfolios and credit risk principles, with a duty of care for reputational and financial risk within an organisation. They typically prepare credit analysis reports and due diligence notes, with credit risk managers taking minutes and memos from the committee meetings.
External to the meetings, credit risk managers perform duties following instructions from the risk manager/head of risk analysis/executive managers.
Credit risk managers create and monitor client portfolios to identify, avoid, and manage changes that create risk in order to increase and protect the business profitability.
This is usually a primary focus for credit risk managers and takes up a lot of time, as they’re required to develop and maintain portfolios, monitor the client’s credit risk policy, and update management or make recommendations if a client becomes a potential risk.
Helping the credit risk team and organisation to improve compliance processes and optimise audit readiness is another task for credit risk managers. They must ensure there is clear correspondence between the credit analysis team and customers or colleagues, as well as respond to audit and regulatory requests.
Aside from this, there are a whole range of responsibilities they must undertake. From enforcing general data protection regulations to suggesting credit risk management policies to senior management, as well as:
Another big responsibility for credit risk managers is helping execute projects and initiatives. They do this through activities such as planning for credit risk analysis and management initiatives, and contributing to or leading credit initiatives and projects, including attending meetings and visiting client locations.
Submitting periodic updates and project reviews, assigning responsibilities within teams, and following other instructions from the head of risk analysis also contribute towards this.
In larger companies, a credit risk manager leads a credit risk department. This means they will spend a substantial amount of time analysing personnel requirements and collaborating with human resources to hire and train new credit personnel and manage their team.
Within the team, they will also delegate responsibilities, identify and communicate key performance indicators for success to monitor team performance, and evaluate performance in order to report back to senior management.
Finally, credit risk managers observe the financial industry to comply with and improve standards. They can do this through:
Our all-in-one credit risk solution offers tools to increase the efficiency of your processes and make credit risk management as straightforward as possible. Red Flag Alert users benefit from:
Learn more about how Red Flag Alert helps you protect your business from financial risk and comply with regulations, why not Try Red Flag Alert today?