Looking beyond Covid-19

Andy Hodson, Risk, Information, Claims and Collections (RICC) Director and Steve Scott, Chief Financial Officer | Euler Hermes UK and Ireland

With the rollout of the Covid-19 vaccine, there is a shed of light that our lives will be back to normal soon. We interview Andy Hodson, Risk, Information, Claims and Collections (RICC) Director and Steve Scott, Chief Financial Officer of Euler Hermes UK & Ireland on the company’s plan going forward and their learnings during the pandemic.

 

1. With the reopening of the economy, what are the top three priorities for Euler Hermes? 

Andy: Emerging from the lockdown will present both challenges and opportunities. Our priority is to continue to support our customers during this period of uncertainty and give them the confidence to trade with new or established partners. Our proprietary information and experienced staff will continue to shape the very best underwriting decisions for our customers to secure their future.

We are very proud of our people. A further priority is to support our staff as they return to the office. The well-being of our teams remains a key priority and we are all looking forward to seeing each other again face-to-face.

The business landscape has changed dramatically since the beginning of 2020. Our next priority is to innovate, adapt and evolve our service in this rapidly changing environment and ensure we continue to put our customers at the very centre of what we do.

Steve: Indeed, and regarding our return to the office, prior to the global pandemic we had already signed a new lease for our head office in Canary Wharf where around 250 of our staff are based. The amount of space we have leased is smaller than previously and we have designed an exciting new layout that we hope will provide a positive and vibrant environment for our staff, and also facilitate our desire to enhance the application of the space for collaboration within, and between, our teams. We are looking forward to seeing our colleagues again in the coming months and utilising our new space to the full.

Finally, Euler Hermes, and indeed, the trade credit insurance industry, reacted swiftly to the impact of the pandemic in ensuring that we could continue to provide our policyholders with the trade credit insurance cover that they needed to continue to trade. This included working collaboratively with the UK Government. As the economy starts to move forward, we will continue to adapt our approach in the same way that our company, which has existed in the UK since 1918, has always done to protect the interests of all our stakeholders and especially our customers and staff.

2. How do you stay current on the latest development and trends in risk and financial management?

Andy: The Euler Hermes information gathering capability is significant with our analysts securing real-time proprietary information on a daily basis from the buyer risks we are running. This information provides an invaluable insight into the latest economic and sector trends and supports our positive underwriting appetite. Having navigated the turbulence of the various economic cycles over the years, our teams have decades of experience that is simply invaluable and adds real quality to our underwriting decisions that we share with our clients.

Steve: A key challenge for us at the moment is that, since 1st January 2021 and as one of the implications of Brexit, our Euler Hermes UK Branch is under the direct supervision of the UK Regulator, the Prudential Regulation Authority (PRA). This presents us a number of new challenges in terms of regulatory reporting. We have been using a variety of methods including internal research and external training to ensure that we are fully cognisant with the requirements. It’s a new challenge for us and one that presents our teams with opportunities to expand our skills and knowledge.

3. Last year has been a challenge for businesses in most of the sectors, what is the best advice you can give to a business owner, to control credit risks and costs right now?

Andy: The trading risks are the same but more acute as we emerge from the Covid-19 lockdown into the post Brexit environment. Some businesses will be looking at new trading relationships and partners that will bring threats and opportunities, so it makes sense to understand and mitigate these risks. There is still a lot uncertainty around the speed of the economic recovery along with the scope and sustainability of government support. Specifically, how do we exit this unprecedented level of state aid  and avoid any potential cliff-edge? To date, the success of the vaccine roll out in the UK is positive but this has to be mirrored around the world before we see a sustainable return to pre-covid levels of economic activity.

In many ways, it’s back to basics. Businesses will still need to know their market, have a strong proposition and meet customer needs. They will also need a strong sense of total stakeholder support, including shareholders, banks, suppliers, customers, employees and of course know their competitors. In terms of trading risks, old partners may look very different as they emerge from lockdown – do they represent the same credit risk now?

Steve: Since the onset of the global pandemic, and in some cases with government support, business owners have had to use all their experience and know-how in order to navigate the economic impacts of the crisis. Particularly when the government support begins to reduce, which at some stage it will, this will present a challenging time during which businesses will need to balance the need to fully restart their trade, whilst continuing to mitigate the impacts of the period during when the economy was largely stagnant. This will require diligent and careful management of risks and opportunities.

4. What have you learnt during the pandemic months?

Andy: In a business context, the pandemic and lockdown have taught us that we can be flexible, agile and resilient in very challenging circumstances. As a team, we have reacted quickly and shaped our approach to the new environment, whether that is working from home or adapting to new ways of communicating. I have been delighted to witness our transformation to a digital business becoming a reality thanks to the support of our IT infrastructure. On a personal level, I have especially  valued the daily contact with my colleagues and learnt that our work relationships are a key input into our well-being.

Steve: I’ve learnt just how adaptable our staff are in which almost all of us have fully worked from home for 12 months now but at the same time, our business has continued to maintain excellent standards in supporting each other and our customers. We have also learnt that full-time remote working may not be an ideal long-term option as the success of our company is based on collaboration and mutual learning, for which there needs to be a level of face-to-face interaction. However, one of the lessons of this crisis has been that we can establish a better pattern of working to promote the well-being of our staff as well as maximising the efficiency of our economy.

5. What do you enjoy most about your jobs?

Andy: No two days are the same. The variety and scope of what we do are very enjoyable and being part of the Allianz Group means that the opportunities open to you are almost limitless. The most enjoyable part however has to be the people you work with.  I’m constantly amazed by the skill and talent of our teams which makes for a stimulating and rewarding working environment.

Steve: Absolutely! The role of a CFO is continually evolving and is now far removed from merely the finance side of the business although that remains a critical discipline. I lead and get involved in a variety of finance and operational projects. This enables me to contribute positively to the success of our company, requires different skills and provides opportunities to work with different colleagues across our business.

The UK has left the EU and new rules for business with the EU came into force on 1 January 2021. Even though a deal has been secured, doing business with Europe has changed. You need to follow new rules on exports, imports, tariffs, data and hiring. Unless you have checked that you are ready, your business may face disruption.
There are several options and tools to mitigate credit risks. You should weigh the costs and benefits of these options and investigate carefully to determine the best fit for your company.