Driving Profitability and Minimizing risk Through Portfolio Management
As the economy recovers, managers of small-business portfolios must always remember
that their loan portfolios are constantly changing. That’s why it’s critical
for risk managers to look at their debt holders differently. They must examine more
closely the behaviors of these owners, especially to predict the potential for fraudulent
activity and what can be done to minimize losses. This is vital because fraud committed
by small-business owners, while relatively rare, generates at least three times the
impact of a conventional fraud loss. An Experian® study of 10,500 “bad”
small-business loans underscores this. By simply amplifying their view of their portfolio
risk, portfolio managers can gain a more complete picture of their small-business
owners’ finances to reap bottom-line rewards. Experian’s extensive data
bank of commercial and personal data is an increasingly essential weapon to use to
detect brewing financial problems and even fraud. Today’s small business lending
portfolios reflect the improving economy, and differ from those during the recession.
This “change is constant” reality explains why portfolio managers must
look much more closely at the loans and the behaviors of their small-business owners
to help identify fraudulent activity and other problems and, ultimately, to drive
profitability and reduce risk.
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