The implementation of an effective risk management policy in the financial sector is of vital importance for the continuation of the existence of institutions. Every financial institution that seeks to collect its receivables on time and in full should also systematically manage the stages after taking the risk. Therefore, effective risk management in the financial sector is one of the key elements of sustainable success. In order to achieve strategic goals, companies should predetermine and define the risks they may be exposed to, and perform proactive control and management activities for risks.

Scientific, numerical and systemic risk measurement techniques are needed in financial institutions within the framework of international standards and legal regulations. These measurements and methods are often used to calculate legal requirements rather than actual concrete assessments. Concrete data, industry information, personal experience and market intelligence are required in determining the risk that companies bear for the institution and the risk of not being able to collect the loan. Especially the prevalence of informality in Turkey and the unreliability of company accounting records lead to this result. It is not possible to understand the risk weight of a company only with technical analysis. In addition, it is not sufficient to evaluate the company on its own. In order to understand the risk weight, the change in the country’s economy and the world economic conjuncture should be consciously followed in the monitoring of the institution’s loan portfolio and necessary measures should be taken accordingly. Risk measurement and assessment techniques can be used as auxiliary tools. Realizing this practice requires employing a sufficient number of expert employees, organizing the risk monitoring function effectively as a department, and allocating sufficient resources and time for this work.

At Ekspo Faktoring, company policies are determined by taking risks into account. Analysis of credit risk, which is critical in the decision-making process, is regularly reported to the Senior Management. The staff of the Risk Assessment Department, experienced in corporate and commercial banking and are experts in financial analysis, loan allocation and intelligence, closely follow the developments in the industry. Ekspo Faktoring manages its placement policy with a dynamic and proactive approach by closely monitoring the risks in its portfolio in the light of different parameters and developing scenarios under various models. While taking risks, factors such as the establishment date and history of the company, the sector in which it operates, the industrial experience of the company’s managers and partners, the shareholders’ equity structure and fund-raising potential are taken into consideration.

As part of effective risk management policies, Ekspo Faktoring strives to diversify the risk and avoids concentrating on a specific industry. The Company manages all risks within sector and group limitations, making sure that a client’s risk never exceeds 25% of its equity. In specifying buyer limits for clients, Ekspo Faktoring remains committed to its decision not to exceed 10% of equity, a ratio determined through careful calculations. For Ekspo Faktoring, conducting healthy risk assessments in international standards is of utmost importance. Accordingly, the senior management has worked extensively to boost the efficiency of risk monitoring activities and to develop an effective risk assessment system. The new system, developed with guidance from consulting firms, was adapted to a rating application in international standards in late 2008. Since early 2009, all Ekspo Faktoring clients are reviewed using the new client rating system.

Ekspo Faktoring works diligently to ensure the quality of the assigned loans and constantly monitors its receivables. The Company effectively uses the check drawing report and risk reports, which were initially offered to the use of non-bank finance companies by Kredi Kayıt Bürosu (KKB - Credit Bureau) in late 2012 and later continued by the Risk Center of the Banks Association of Turkey. The functions utilized also include inquiries and notifications, such as paid bond statements, bounced checks in litigation, cross-checks, and blacklisted companies, etc. Ekspo Faktoring reviews its clients as well as its collateral portfolio weekly, bimonthly and monthly as part of its risk monitoring activities, and also uses the combined risk follow-up system where combined risks are listed and changes can be reported. The credibility of the companies applying for credit line allocation or raising their current lines is evaluated objectively. Outstanding risks are also assessed in terms of balance sheets, intelligence, and collateral in the weekly Asset Quality meetings.

Ekspo Faktoring acts prudently and with due diligence in forming its credit portfolio to maintain its asset quality above sector average. For this purpose, the Company benefits from the experience of the Risk Assessment Department, which specialized in financial analysis methods and techniques. The Financial Analysis and Intelligence Team within the Risk Assessment Department follows the latest techniques and regularly attends credit, financial analysis and intelligence training provided by professional training institutions to stay up-to-date. The Risk Assessment Committee evaluates clients that apply for financing according to various criteria, including financial position, industry, operational risks and market intelligence. The Committee convenes weekly, or more frequently when needed, to evaluate and finalize client requests in maximum of two days and holds interim meetings in critical situations that require immediate attention. In the meetings, Company Assessment Reports, prepared as a result of financial analyses and market intelligence for individual companies, are discussed. At the end of this process, the credit line allocation request presented to the Risk Assessment Committee is either approved or declined.