IRMI Update—Issue #144
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
September 6, 2006
In This Issue
Colleague,
It is a great pleasure to announce a significant addition to the IRMI resource
library, Practical Risk Management, which
we acquired from its previous publisher, ARM Tech. Practical Risk Management is a source of
practical, concise, action-oriented background and advice on all of the most
important activities, techniques, and tools of risk management. It is so good
the Pittsburgh chapter of the Risk and Insurance Management Society (RIMS) ranked
it as the "most useful" manual for risk managers in a research paper presented
at the national RIMS annual meeting in the 1990s, and one of my mentors, Dr.
E.J. Leverett, has often said, "If I could have only one reference manual in
my library, Practical Risk Management would
be the one."
Since 1974, Practical Risk Management has been one of the world's most widely used risk management references. I relied
on advice it provided when I was a consultant in the 1970s and have admired
it from a publisher's perspective ever since joining IRMI in the early 1980s.
Everyone here is excited to add such a high-quality publication to the IRMI
library of resources.
To assure we maintain the practical, hands-on focus of Practical Risk Management, we decided to
invite a veteran risk manager to join the IRMI editorial team. I am delighted
to tell you that Millicent Workman, CPCU, is joining us for that purpose. Millie,
who is currently serving as president of the CPCU Society, has more than 30
years of risk management experience in a variety of industries. She was honored
by Business Insurance magazine in 1992
as Risk Manager of the Year, has served in leadership roles in the Memphis RIMS
chapter, and has been placed on several "who's who" lists in recognition of
her many achievements. I see even greater things on the horizon for an already
great publication with Millie at the helm.
You can learn more about Practical Risk Management,
and review the table
of contents.
Thank you for subscribing to IRMI Update.
Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Use Credit Insurance on International Receivables—Banks
traditionally don't lend against foreign receivables because they don't have
an efficient way to credit-qualify their borrowers' customers. Exporters using
open account terms cope with the fact that these receivables deplete cash. Approximately
80 percent of exports are now made on open account terms with an average days-sales-outstanding
(DSO) ratio of 75 days. This compares with an average of about 40 days for domestic
sales.
Although transactions done via letter of credit (LOC) are declining due to
the emergence of more efficient information flows and risk management structures,
exporters selling on LOC terms, even if they offer 90 or 180 days for payment,
ordinarily can discount the receivables and receive immediate cash. Foreign
open account receivables are not as easy to discount. Active exporters often
have huge amounts of working capital tied up in foreign receivables and can't
borrow against them.
Many banks therefore now advise these customers to get credit insurance on
their international receivables. With appropriately structured credit insurance,
banks can include otherwise ineligible foreign receivables in a customer's borrowing
base. And if the exporter sells its foreign receivables, it can often get an
accounting opinion that allows it to take them off the books, resulting in unencumbered
cash and major improvements in DSO. Credit insurance policies usually include
protection against a wide range of international trade hazards including buyer
insolvency, protracted default, and nonpayment due to foreign governmental actions.
As credit terms offered to customers have become an important component of
competitive strategy, credit insurance allows policyholders to gain competitive
advantages through extended open terms, aggressive credit limits, and support
while expanding into emerging markets.
Buddy Baker
Vice President, Atradius Trade Credit Insurance
Baltimore
buddy.baker@atradius.com
www.atradius.com/us
Suggest a Risk Tip. Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. Submit your tips. We'll
acknowledge your contribution as we did for Buddy.
We have recently updated a number of the reference manuals in the IRMI library
and published new issues of
The
Risk Report and
Captive
Insurance Company Reports. To make sure you don't miss any of this
new information take 30 seconds to scan the "What's New" summary page.
For IRMI
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There are now over 800 risk management and insurance articles on IRMI.com.
Below you'll find summaries of some recent additions with links to the articles.
Our annual analysis of the insurance market will be published in the September
issue of
The
Risk Report. Online
subscribers will receive this market report, plus access to a topical archive
of more than 200 previous reports. Each monthly issue of
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More than 500 construction risk and insurance professionals have received
their Construction Risk and Insurance Specialist (CRIS) designation. The CRIS
continuing education program has also been approved for CE credit in all 49
eligible states. Learn
more about this specialized curriculum to gain expertise in construction
insurance and risk management.
Jeff Kichaven has written 14 articles on mediation issues since he began
writing for IRMI.com in 2003. As a leading mediator of insurance coverage and
bad faith cases, he was acknowledged as "California Lawyer Attorney of the Year"
by California Lawyer Magazine in 2006.
magazine. Since starting his full-time mediation practice in 1996, Mr. Kichaven
mediates approximately 150 cases per year. His columns address the ways lawyers
can best use mediation to achieve better results and greater client satisfaction.
For more information on Mr. Kichaven, see his full biography and a list of his articles.
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