Kyle Williams
Head of Political Risk and Structured Credit - Pacific
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Australia
In today's rapidly changing business landscape, credit risk has emerged as a critical factor that can significantly impact businesses’ financial health and stability. Businesses should seek to understand the evolving credit landscape and take proactive measures to mitigate potential risks.
That is ever more important as the global credit risk landscape undergoes a significant shift. With the highest speculative-grade global default rates in a decade (excluding late 2020/early 2021) and the likely end of an era of historically low default rates, businesses must be prepared for the possibility of increased credit defaults and take steps to safeguard their financial positions.
Certain sectors are particularly vulnerable to insolvency risks in 2024, including media, telecommunications, discretionary sectors, and transportation. These sectors face several challenges, such as:
In line with constrained economic conditions, the credit insurance market is experiencing a rise in claims. Financial institutions filed 19% more claims notifications in the first quarter of 2024 compared to the fourth quarter of 2023.
Organizations must adopt a proactive approach to identify, manage, and monitor these risks. This may include developing contingency plans, diversifying suppliers, implementing robust risk assessment frameworks, and incorporating sustainability practices into their operations.
In this challenging credit risk landscape, building resilience through liquidity is key. By proactively managing their liquidity positions, businesses can enhance their ability to weather potential credit shocks and seize growth opportunities.
Head of Political Risk and Structured Credit - Pacific
Australia
This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modelling, analytics, or projections are subject to inherent uncertainty, and any analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change.
LCPA 24/341