For anyone in the Credit profession, or anyone on planet Earth for that matter, it has been and continues to be interesting times.  I’m being a bit glib here by using “interesting” but I’ve lost count of how many times I’ve heard the word “unprecedented” over the past 3 years.  Just to re-cap, we’ve collectively been through Brexit (for those of us UK based or do business with the UK), Covid & a series of lockdowns, work from home eventually moving into hybrid, supply chain issues, FX challenges, war in Ukraine, Liz Truss’s “mini-budget” (UK specific, again), significant inflation & interest rate rises culminating in what the media calls a “cost of living crisis”,  and now the Israel – Hamas conflict which, apart from the humanitarian impact, is significantly concerning to the markets as well as creating additional oil price volatility.

On the positive side, there are some green shoots;  inflation seems to be easing (this doesn’t mean stuff is getting cheaper;  it’s just getting more expensive but a slower pace), interest rates, although forecast to stay high for most of 2024, are not predicted to rise further, the banks are reporting bumper profits thanks to higher interest rates (whatever your opinion is of the banks, higher profits means less probability of tightening credit conditions which is good for business & the economy), a relatively stable job market on both sides of the Atlantic, a resilient U.S. economy so far and China, although growing more slowly than predicted, is forecast to accelerate next year.

And of course, there are additional risks looming on the horizon;  elections in both the U.S. and the UK, both of which will be (sorry) “unprecedented”, continuing concerns about China’s economic rebound & housing market as well as potential for conflict over Taiwan, Germany, as the economic “powerhouse” of the EU, continuing to struggle post-pandemic, as well as the continued cost pressures on both businesses and consumers putting pressure on retail markets, housing, business investment and constraining global growth, as well as the ongoing aforementioned conflicts.

As Credit professionals, it is our job to be prepared for the unexpected, to prognosticate in order to spot red flags and take action to protect the debtor asset against bad debt at the same time supporting revenue and commercial aspirations.  (For those of you in the know, this is akin to juggling several live grenades with one hand tied behind your back.)   As a Credit professional, you need to be knowledgeable about current events as no business exists in a “bubble”.  The events that impact our personal lives also have a significant impact on our professional lives and it is critical to understand how these events will determine business outcomes.  As I’ve stated previously, the 2009 financial crisis was one of the greatest learning experiences of my career.  The same is true of today’s world and the same lessons can be learned by the next generation of Credit professionals to give them the knowledge, experience and resilience to become experts in their craft.

“No one is so brave that he is not disturbed by something unexpected.” – Julius Caesar