Financial Risk Management As Strategic Tool

Techniques developed in automakers’ finance arms can aid their other businesses

The auto industry faces an ever-expanding range of risks: New mobility services, self-driving systems, and other technological advances are changing the ways cars are used, as well as customer expectations.

Digital tools are taking on new roles, such as customer targeting and market-trend identification. At the same time, regulations and compliance standards are constantly being tightened.

These challenges are elevating the role of automakers’ finance departments. Long relegated to the position of assisting in the financing of customer purchases and managing sales units, the compliance requirements of the role dictated that the finance function develop advanced risk-management systems and methods. These tools and processes included, among other things, early warning frameworks, customer risk assessments, and financial planning. And now, given stricter financial regulations, finance departments are upgrading and improving their risk management techniques.

Success rates of fraud identification algorithms

Classic vs. innovative indicators

Source: Oliver Wyman

Financial Risk Management As Strategic Tool