Product details

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Technical note
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Reference no. 119-0108-6
Published by: Lagos Business School
Published in: 2019
Length: 7 pages
Data source: Generalised experience

Abstract

The technical note explains the different associated risks that could occur in the life of a typical credit extended to a business. The note describes the typical operating cycle of an organization and goes further to highlight the various associated company-specific and industry-level risks that could arise in the cause of completing an operating cycle. Some industry-level business risks described in detail include supply risk, production risk, marketing risk, collection risk, while firm-specific risks discussed include sales risk, fixed costs risk, leverage, and management quality. Other risks include interest rate, foreign exchange, cross-border and clearing. The note concludes with a discussion on loan-loss provisioning and the prudential guidelines of the Central Bank of Nigeria.

Time period

The events covered by this case took place in July 2019.

Geographical setting

Region:
Africa

About

Abstract

The technical note explains the different associated risks that could occur in the life of a typical credit extended to a business. The note describes the typical operating cycle of an organization and goes further to highlight the various associated company-specific and industry-level risks that could arise in the cause of completing an operating cycle. Some industry-level business risks described in detail include supply risk, production risk, marketing risk, collection risk, while firm-specific risks discussed include sales risk, fixed costs risk, leverage, and management quality. Other risks include interest rate, foreign exchange, cross-border and clearing. The note concludes with a discussion on loan-loss provisioning and the prudential guidelines of the Central Bank of Nigeria.

Settings

Time period

The events covered by this case took place in July 2019.

Geographical setting

Region:
Africa

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