Trade Finance Risk Management
Manage and prioritise trade finance instruments and strategic partnerships to minimise risks in international trade
Type
Domain
Competency Area
Trade and Investment Facilitation
Levels
Comprehends types of risks in international trade and trade finance solutions
Understands commercial and financial risks in international trade (such as order cancellation, late delivery, delayed payments, shortage of currency, interest rates fluctuations etc.)
Describes risks due to different cultures and political factors in securing delivery, payment and current exchange rate
Understands structured financing products in trade intended to reduce risks due to changes in trade regulations
Identifies challenges in trade finance products adoption and regulatory compliance
Identifies the steps involved in payment under collection approach covered by payment guarantee (Such as FX agreement, payment guarantee)
Documents the challenges facing trade finance in emerging economies (such as closure of banking correspondent relationships post-financial crisis, varying level of demands on local bank)
Guides the trade and financial communities on regulatory compliance requirements (international banking and financial flows) through capacity building activities
Synthesises risk exposure assessment across the portfolio products in consultation with trade sales, credit risk management, operations and legal team
Reviews financing needs and partnerships
Proposes the use of payment terms (such as collection or documentary credit), standard delivery terms (such as Incoterms) and well-structured deal terms to reduce commercial and financial risk
Encourages the adoption of right hedging products to minimise financial risks
Streamlines inter-institutional cooperation and strategic partnerships in addressing the shortage of trade finance in developing countries through working capital and inventory finance solutions
Analyses the financing structures in the supply chain to assess financing requirements
Designs tools that facilitate compliance with new regulatory requirements (such as anti-money laundering and countering the financing of terrorism AML/CFT) and analyze gaps in resources and expertise for implementation
Applies risk management frameworks and practices to identify potential risks and voice risk views in transactions