Early Warning Signals for Large Corporates and SMEs

This course provides delegates with an overview of prime Early Warning Signals across a range of different industries internationally.  It will provide the delegates with an insight into a range of potential danger areas that can be identified as part of the loan monitoring process and initial corrective action that the banker can take in preventing the situation from deteriorating.

By emphasising the need to focus on potential defects in the client company, its markets and management as well as any potential mistakes that management are making, the bank will be able to get ‘ahead of the curve’ in prevent the client loan from turning bad.

The areas covered as part of this module will allow the executive analyst to understand whether the RM is monitoring the progress of the client, effectively or not. Many of the EWS can also be applied more widely to initial credit risk analysis.

1. Provides Corporate bankers and Relationship Managers with a comprehensive overview of key Early Warning Signals that might indicate a company is beginning to experience financial distress.
2. In addition to a review of leading financial EWS we will focus on time leading signals arising from corporate actions, management strategy and behaviour and tends arising from the client’s industry.
3. We shall also review external risk factors and what key risks might crystalise impacting on the company’s ability to generate free cash flows

• A full, holistic review of typical EWS across a range of industries
• Liquidity problems, their causes and impact on the SME client
• Assessing Operational, Business, Internal and Financial EWS in SMEs
• Reviewing a wide range of the IFC classification of different types of EWS
• Key financial EWS and ratio analysis that can help us identify failure
• The need to identify Defects and Mistakes and not simply relying on the assessment of the historic financial statements for EWS detection
• Assessing the different stages of crisis that the SME can face on the road to default
• The danger of the liquidity crisis and the EWS of potential SME liquidity problems
• EWS of poor working capital management and overtrading in SMEs
• Review of the most common symptoms of failure
• The application of univariate and Z score analysis to client monitoring
• Leading EWS and indicators of financial distress include external risk analysis
• The application of PESTEL & Market analysis to identify potential EWS in SMEs
• Spotting EWS in Management Behaviour and its central role as a leading EWS
• The importance of identifying EWS from the wider business and industrial environment
• A full discussion regarding preliminary corrective action that can be taken once EWS are identified and how the RM should engage with the client.