M.Comm. / Many companies, especially in the steel industry, are today required to dedicate much of their time to managing the risks they are faced with. Risk can be defined as the uncertainty or probability of the potential deviation from the expected or the norm. Risk management therefore encompasses all activities undertaken by management, which seek to reduce either the probability of a potential deviation and/or the quantum of the potential deviation. The risk management process is therefore aimed at ensuring that the steel company will deliver to its shareholders the earnings that are expected of them. In order to avoid these potential risks, the steel company has to make sure that the clients that the company are doing business with have the ability and willingness to pay their accounts. There is a very thin line between choosing potential clients and the sales that will be gained from dealing with these debtors, and the risk that these debtors has for the steel company. It is therefore important to categorize the debtors into different risk profiles. After the category of risk is identified, the steel company has to choose between different credit insurance methods to cover risks. The methods that are currently available in the steel industry are rigid, and are costing the company money, that could have been invested elsewhere in the company. It is therefore important to look at alternative methods to either avoid the risks or cover the risks. It depends on the type of client the company is doing business with. The clients can be classified as A, B, C or D risk profile. The composition of the debtors book in terms of risk profiles will be the criteria for choosing a method for credit insurance.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:1858 |
| Date | 07 December 2011 |
| Creators | Van der Walt, Johanna Cornelia |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
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