Contagion – now a word heard often in relation to economic financial crisis

By Ron Doyle

When I wrote a series of blog posts, starting in July 2010, “contagion” was a word seldom heard in a financial context. Six months later, it’s a buzz word in the papers every day and used in the same context as in my blog posts.

The premise for "contagion" is that large sovereign debts can not be contained to one or even a group of countries. The infection spreads to other countries and financial institutions. Brian Milner in his Globe and Mail article of November 30, 2010, Contagion spreads to euro zone banks, and Rex Merrifield, in his Reuters UK story, Euro zone periphery hammered as default fears rise - also published in the Globe's Report on Business - clearly explain how the contagion is likely to spread further.

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“It is legal to be stupid, but it’s not mandatory.” An abrupt, brutal note of caution to those who would relax trade credit insurance vigilance, as the economic slowdown ends

By Rob DowneyAlfred E. Neuman (named by Harvey Kurtzman) of Mad Magazine

I urged readers in prior blog posts to conceive of both credit insurance (CI) and political risk insurance (PRI) as diverse tactical tools for a busy world AND as strategic “glocal” solutions to be structured globally and implemented locally.  

My previous advice was directed to an engaged and practical audience. But recently, I tried to calm a client’s fears by offering bland assurances that competitive pressure would keep underwriting practices in our industry flexible and reasonable for years to come. For that, I earned from Brandon Baker, a partner at ICBA in the U.S., the rebuke cited in this blog post’s title  His intent was to challenge my easy certainty that sobriety would prevail in our industry, simply as a consequence of the economic slowdown. “Thanks,” I might have replied to his humorous startling retort, “I needed that.”

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Global Economic Trade Issues Affect Diverse and Disparate Companies, Final of Three Parts: VACCINES

By Ron Doyle

Vaccines provide immunity against disease. There are “vaccines” available that fight the financial and political threats to your company’s health.

In this final blog post of the series (read part one, CONTAGION, here and part two, INFECTION, here), I start with esoteric threats and move to the more mundane problems of everyday credit management. I also introduce protective measures available to a company in peril.

1. As credit and foreign aid are reduced, and civil war, rebellion and civil commotion become the norm in many countries, these events may make it impossible for a foreign investor to access an investment. Political risk insurance can cover such risks at a reasonable cost, and coverage can be put in place to protect an investment for a number of years.

2. Companies working on contracts overseas often bring in equipment to carry out the contract. The equipment may be impossible to repatriate at the end of the contract, particularly, if the contract is cancelled or falls into default.

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ICBA brokers can help to insure you against the next political risk crisis

By Ron Doyle

Kevin Carmichael in his article on monetary policy in the Globe and Mail’s Report on Business of Friday, January 15, 2010, refers to the high levels of worldwide government debt, resulting from huge stimulus packages, as the biggest threat to global recovery. The article refers to the World Economic Forum Global Risk Report 2010, in which the London based group raises concerns over the high degree of interconnectedness between all areas of risk and warns that unless we address these risks they may cause the next crisis.

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Coface's Corine Troncy says transparency and trust between Coface, ICBA and clients are priorities

Excerpt from ICBA Advantage Issue 5 – Winter 2009/10Corine Troncy

Coface, based in Paris, France, with 130,000 clients worldwide and a direct presence in 67 countries, recently introduced its “New Deal” giving clients more flexibility in the managment of portfolios and increasing dialogue among risk underwriters and clients. Improved transparency allows Coface to show clients how the company monitors accounts, identifies portfolio quality, and helps Coface be extra agressive in underwriting clients’ limits. Corine Troncy is Global Sales & Business Development Director, Coface Holding.

Question: Since the credit crisis began in 2007, Coface has maintained excellent guarantees, totalling €364 billion mid-way through 2009. Coface also reports improvements to its risk profile. How do these measures benefit customers?  

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