Lockton teams up with CreditorWatch to release toolkit

Insurance broker Lockton teamed up with data company CreditorWatch to launch the Credit Manager Risk Toolkit.

The toolkit delves into the evolving role of credit managers and some of the risks they are not paying enough attention to, including rising shortcomings in business interruption insurance, risk of customer contract penalties, third parties failing to deliver or suffering a breach, and data shared between external vendors becoming exposed to cyberattacks.

The toolkit also includes key considerations and suggestions as to how credit managers can respond to risks and insights from CreditorWatch chief economist Anneke Thomson and director Ali Zoabi on these matters.

Supply chain risks

Focusing on supply chain risks, the Credit Manager Risk Toolkit noted the increasing number of shortcomings in BI insurance, increasing customer/supplier bankruptcy and defaults, and companies making ESG statements becoming exposed to risks from failures or bad behaviour by key suppliers or customers.

The authors advised credit managers to focus on the following:

• business continuity plan, which is likely out of date if it has not been tested for over two or three year
• insurance cover, which could be out of date and presents a sleeping critical risks if or when a major claim happens
• modern slavery

Economic risks

The authors reminded credit managers to focus on economic risks, including risk of customer contract penalties, underinsured assets, and out-of-date insurance cover. They also advised credit managers to consider the following business and insurance impacts:

• inflation, interest rates, and supply chain disruptions
• costs and cover amendments to insurance
• increased insolvencies and late payments

Cyber security and technology risks

The toolkit emphasised that if a third party fails to deliver or suffers a breach, the organisation using the vendor will face the consequences. It further reminded credit managers that:

• data shared between external vendors can be exposed
• cloud and API exposures can result in the loss of valuable information from an organisation's database
• useful technology such as AI could have unforeseen risks
• using data analytics must be carefully managed

The toolkit also emphasised that inflation should not hinder organisations from investing in cybersecurity.

Geo-political risks

Focusing on geopolitical risks, the toolkit advised credit managers to focus on loss of profit following an insured property damage event, lead times on critical supplies taking longer to source or transport, and additional costs incurred post-loss to maintain supply or continue customer service.

In July 2023, Lockton Re, the reinsurance arm of Lockton, launched a new research series.