The economic meltdown prompted Cisco Systems to adopt a comprehensive, bank-like approach to credit risk management and to consolidate tracking of trade receivables, loans and leases, and investments–all multibillion dollar portfolios.

"For the first time, Cisco is able to quantify and segment the biggest risk contributors in terms of expected and unexpected losses," says Roger Biscay, treasurer and vice president. "This allows the corporation, as well as individual functions, to better assess, manage and mitigate credit risk and execute on cross-functional risk reduction in a timely manner. We can quickly and routinely assess the impact on capital and earnings per share under various catastrophic credit loss scenarios. This new ability helps to ensure adequate bad debt reserves and equity capital to absorb any adverse outcome without jeopardizing solvency."

Cisco formerly managed its three credit portfolios separately, even though important counterparties often showed up in all three. Total exposure was often masked by the walls between portfolios, explains assistant treasurer Greg Bromberger. Rolling up the total global credit exposure for even one counterparty was a manual task that often took up to a day, Bromberger notes.