| It is a given fact that any existing company | | | | customers. This is why companies have to |
| in the professional realm today faces risks | | | | invest in the proper identification of their |
| at one time or another. An online marketing | | | | target markets. Now, there are certain levels |
| business, for instance, faces the risk of not | | | | when it comes to identifying your target |
| meeting the deadlines set by their clients. | | | | markets, and these include the primary, the |
| So, the proprietors of these businesses would | | | | secondary, and the tertiary levels. |
| have to make sure that they are indeed | | | | Regardless of what level a particular |
| equipped to meet, and even beat such | | | | customer belongs to, the overall market |
| deadlines. These are examples of risks that | | | | should still be targeted as accurately as |
| are not too scary in nature. However, when it | | | | possible. |
| comes to businesses that deal with money | | | | |
| every single working day, then there are | | | | Now that you already know your target |
| indeed a lot of financial risks involved. | | | | markets, you should also include in your |
| Such is the case with banks, lending | | | | framework knowing your individual customers. |
| companies, and other financial institutions. | | | | There are so many risks involved in the |
| Credit risk management is indeed a must, and | | | | process of granting loans. Oftentimes, a loan |
| with the help of credit risk management | | | | officer would scratch his head, thinking to |
| notes, the very existence of the organization | | | | himself how he never expected a particular |
| itself can even be saved. | | | | borrower or debtor to default in payment. You |
| | | | have to understand that each and every debtor |
| It does not matter if you are operating a | | | | does have every potential to do this, even if |
| bank, a lending company, or other types of | | | | his financial status dictates how this is not |
| financial institutions. Just the fact that | | | | likely to happen. Thus, a thorough |
| you are dealing with money and you are | | | | investigation of the debtor has to be |
| lending huge amounts of money to your clients | | | | implemented. This is a very vital part and |
| is enough to put your company at financial | | | | should be included in credit risk management |
| risk. Imagine what would happen if all of | | | | notes. What is important here is to check on |
| your borrowers would suddenly decide to | | | | the borrower's present credit standing as |
| default their loans. This would jeopardize | | | | well as his financial background. The |
| the status of the financial institution, not | | | | borrower's liabilities should also be matched |
| to mention it can also shake the very | | | | against his assets, to check if he does have |
| foundation of the institution itself. Thus, | | | | sufficient income to pay off his debt. |
| there has to be a certain framework | | | | |
| developed, and all processes implemented | | | | Bear in mind that financial institutions are |
| should adhere to this framework. | | | | not the only enterprises that are prone to |
| | | | credit risk. This is precisely why there has |
| Knowing your customers is a very important | | | | to be a properly defined system implemented |
| part of your framework. In any industry, it | | | | to deal with credit risk management |
| is almost always a given to know your | | | | accordingly. |