Search
 
Best Practices

Watching Your Back

Credit tools that predict trouble

By John Labate | Updated on February 01, 2006

For Emera Inc., a $1 billion electric power company based in Nova Scotia, the biggest financial risk it faced was default of its corporate customers. But as Ken McOnie, the director of finance for the owner of Nova Scotia Power, will concede, sometimes credit decisions boiled down to how he was feeling on a particular day or how much pressure he was getting from his traders. This was primarily because the company lacked sufficient data and an assessment tool to analyze the numbers. It was a situation fraught with risk, and McOnie decided he had to address it.

Although sophisticated risk analytics have tended to be the reserve of the large multinationals and financial services providers, McOnie was determined to find a tool that made sense for Emera. After reviewing the field he chose Web-based RiskCalc from Moody’s KMV Co. With RiskCalc, Emera receives a daily flow of e-mail alerts on a combination of credit sensitive terms, including payments to vendors, financial statement data and equity market information for public and private companies. “I don’t think we’d be rating down counterparty weighting limits if we didn’t have this tool,” McOnie says. “We had been reactive, and now we tend to be very proactive and have adjusted several counterparties down.”

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

U.S. Labor Costs Rise More Than Expected

U.S. Labor Costs Rise More Than Expected

Molly Smith |

Fear that wage gains will stoke inflation may lead the Fed to tread more carefully in its interest rate decision this afternoon.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.