Triple AAA Rating – the failure rate continues to climb

Every business transaction contains an element of risk, yet at the same time how satisfactory are the mechanics for managing risk?

In recent years we have witnessed just how costly the laissez faire attitude to risk was in many institutions be they large corporations or smaller SME’s.

In the never ending quest for larger profits many of the saner measures of business were abandoned. An analysis of recent disasters from the subprime fiasco in the US through to the Greek Debt debacle all have one common denominator – the architects of these calamities went hurtling over the cliff like lemmings.

Now Europe has received a severe judgement from one ratings agency - Standard and Poor. Nine Eurozone countries have been downgraded.

France lost its much valued AAA rating. It risks now seeing its borrowing costs rise. It needs to raise 290bn Euros ($370bn; £241bn) just to pay off old debts. Almost certainly they will now have to pay more.

A forensic analysis of your company’s current Debtors Book might make for uncomfortable reading but like most unpleasant tasks it should not be ducked. Better to take remedial action such as a write down whilst you are in control of your own destiny rather than have a 3^rd Party appointed to do it for you.