Assessing the Risk of Potential Clients

Unfortunately, I am not in the Thursday class, so I did not get to enjoy the lively discussion on this topic.  That being said, we did have a synopsis of the presentation and a nice chat on the subject in the Monday class.  Our talk, however, was more on the execution of the business loans and the screening for those types of loans.  We only briefly discussed the screening for personal loans.

The problem I see with these requirements is that they are beneficial for the client or prove that the client is poor, but they do not demonstrate that the potential client has the ability to pay back a loan.  The only requirement that might give us some type of inclination as to how this person behaves is the recommendation.  However, there is a lot of risk that is involved with recommendations as there is no way to know if a person is lying or telling the truth.  The fact of the matter might be that the person giving the recommendation really doesn’t know if the potential client would make a good client or not.

The screening process of our clients should give us a sense of what the person is like so that we can assess their risk of defaulting.  Though it is not full proof, recommendations is the closest to getting an accurate risk assessment that we can feasibly do at this time.

One Response to “Assessing the Risk of Potential Clients

  • econrad
    7 years ago

    Thank you– the problem is that in serving the “poorest of the poor”, many cannot give you much other than their word that the loans can and will be repaid. It is the nature of our work. Our team is looking to navigate this tradeoff…. can you elaborate on what types of questions you think are important/prove the ability of a client to pay back?

    Thanks again! –loans

Leave a Reply

Your email address will not be published. Required fields are marked *

css.php