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.
What does a Credit Risk Manager do?
A credit risk manager is a financial professional who helps businesses analyse, prevent, and manage the risks of lending money to both businesses and individuals.
Credit risk managers fill an important role and are employed across a variety of sectors. but are vital for organisations such as banks, credit unions, capital management firms, finance consultants, investment banks and insurance companies.
What skills should credit risk managers have?
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:
- Risk management
- Communication
- Computer skills
- Data analysis skills
- Portfolio management
- Due diligence
- Financial modelling
- Problem-solving
- Organisation
- Time management
Why do you need a credit risk manager?
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 supervision
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.
Credit application management
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:
- Recommend approval/denial/adjustments for credit applications.
- Justify credit decisions in both written and verbal explanations.
- Provide feedback on existing and prospective customer requests to other teams within the business.
- Communicate with your credit risk analysis team regarding their work on credit applications.
- Reply to clients regarding credit requests and update credit application statuses daily.
- Collaborate with lenders to set interest rates for different loan packages (dependent on client creditworthiness).
Risk committee engagement
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 portfolio development and monitoring
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.
Compliance and audit oversight
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:
- Preparing accurate annual credit reviews
- Examining data extension requests from clients
- Maintaining comprehensive knowledge of credit products and portfolios
- Ensuring the credit analysis teams follow credit procedures and policies and maintain all files in accordance with the institution’s formats, requirements, and standards.
Credit risk management project leadership
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.
Team and business operations execution
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.
Financial industry proficiency maintenance
Finally, credit risk managers observe the financial industry to comply with and improve standards. They can do this through:
- Following industry news to monitor trends and learn about current risks.
- Attending financial and credit seminars
- Observing competitors
- Networking with other risk analysts
- Organising training sessions to help develop the credit risk analysis team and ensure they’re kept up to date with industry news.
How can Red Flag Alert help you?
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:
- Financial health data for businesses in almost every country in the world.
- A detailed rating system that predicts each business’s financial situation.
- Sophisticated scorecards that provide clear ratings.
- Data is automatically sent to your CRM and updated in real-time.
- Credit risk monitoring updates are provided in real-time.
- Tools to help you fulfil regulatory requirements like AML and GDPR.
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?
