As the challenging economic environment leaves more firms vulnerable to financially distressed suppliers and customers in all parts of the world, Marsh Risk Consulting (MRC), a unit of Marsh, the world’s leading insurance broker and risk advisor, has developed a new solution to help companies assess the financial viability of their trading partners.

Unlike traditional approaches to vendor liquidity assessments and customer credit screening, MRC's solution uses net asset value to evaluate the financial viability of a supplier or customer. The solution, which draws on the expertise of MRC's Supply Chain Risk Management and Valuation Services Practices, can be applied rapidly to a firm’s trading partners worldwide, in many cases on a real-time basis.

"In the global economic recession, businesses can ill afford to assume significant risks associated with the financial status of their trading partners and customers," said Phil Antoon, global practice leader of MRC's Valuation Services Practice. "Our approach gives clients the ability to obtain analyses on an expedited basis with minimal intrusiveness to suppliers and customers."

He added that each engagement can be customized to fit a company's specific requirements.

MRC's approach enables businesses to select a range of financial viability measures as well as to scale the analysis. Companies can start with a high-level screen of a large number of suppliers or customers to identify potential problems, and can proceed to a full evaluation of suppliers or customers found to have potential viability issues based on the screening.

If the loss of any suppliers or customers could materially affect a company's financial statements, MRC can provide a solvency assessment to assist management decision-making.

MRC's solution can be applied in a variety of situations, including:

• As a stand-alone assessment of the financial viability of suppliers and customers
• As a complement to existing financial viability measures
• In support of a firm’s efforts to procure and structure trade credit insurance
• As an independent evaluation of customers' ability to satisfy accounts payables

MRC clients also use the financial viability solution in conjunction with complementary services provided by Marsh and its affiliate MMC company, Kroll, including supply chain diagnostics, vendor integrity analyses, and risk transfer solutions.

"As businesses reassess the value of their hyper-extended supply chains, they need a strong understanding of the ability of their customers, suppliers, and their suppliers' suppliers to meet their contractual obligations," said Gary Lynch, global practice leader of MRC's Supply Chain Risk Management Practice. "Today, financial viability assessments often are a critical first step in a company’s efforts to improve its supply chain literacy and resiliency."

For more information on Marsh's supplier/customer financial viability solution contact Myriam Carayannis by telephone at 212 345 1076 or by email to myriam.carayannis@marsh.com.