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Risk in Trade Finance & Trade Finance Products

An essential overview of risk identification and mitigation techniques that can be used to manage and reduce risks in trade finance products and services

A chessboard with the pieces arranged in a strategic position

A one-day course

Part One

Trade Finance Overview

  • Current marketplace
  • Broad principles of trade finance
  • Parties to a transaction
  • Typical users of trade finance products and services
  • Payment mechanisms
  • Trends

Risk – The Critical Issues

  • Risk appetite –set by the board
  • Understanding, identifying and managing risk
  • Risk ladder for standard trade products
  • Sovereign, Political / Country risk
  • Institutional risk / Bank risk
  • Importer and Exporter’s risk
  • Risk mitigation, management and transfer

Case Study – the impact of risk on trade – the often differing bank & client’s perspectives 

Financial Crime Compliance & Sanctions

  • Why is trade finance considered a high risk?
  • Understanding the risk-based approach
  • TI CPI, FATF, Wolfsberg, ICC, OFAC and other influencers
  • CDD, EDD, DDD and the need to obtain a clear line of sight across the value chain
  • Money laundering methodologies – how is it done?
  • PEPS
  • Sanctions overview 

Case Study - Delegates will be asked to consider a real case to identify FCC risks and suggest how they may have been managed and mitigated 

Review of Key Products

  • Payment in in Advance/Escrow
  • Open Account
  • Collections – Outward & Inward / Clean & Documentary
  • Letters of Credit
  • Trade debt insurance as a mitigant
  • Risks and opportunities
Case Study – How does your client choose to trade – what would you prefer? 

Part Two

Regulatory and Trade Conventions and Their Role in Risk Migration

  • Incoterms - the list
  • UCP 600
  • URC
  • URDG
  • Other Significant Publications 

Traditional Products - Inherent Risks and Available Mitigants

  • Payment in Advance/Escrow
  • Open Account
  • Collections
  • Letters of Credit
  • Guarantees & Indemnities
  • Currency transactions
  • Avoiding unhelpful retrospective advice 

Case Study – Consider a request for funding and identify the risks and the mitigants. Can we support the deal? 

Letters of Credit (L/Cs) - Additional Mechanisms

  • Transferable L/Cs
  • Revolving L/Cs
  • Evergreen L/Cs
  • Standby L/Cs
  • UPAS
  • Back to back structures (brief intro)
  • L/C & Bill Discounting
  • Avalised bills 

Case Study

Risk And Mitigants For More Specialised/Bespole Products – Overview

  • Reverse Factoring
  • REPO trade
  • Non-Recourse Trade
  • Invoice Discounting
  • Receivables Finance
  • Seller Centric Schemes
  • Borrowing Base
Case Study – Consider some examples of the above

Risk Assessment for Credit Analysis and Application Purposes

  • Structuring – the options
  • Analysing the trade flows
  • Assessing facility size and structure
  • Identifying and mitigating the risks
  • Gearing, repayment, profitability and liquidity
  • Specific lending with identifiable maturity dates
  • Appreciating and controlling sources of repayment

Security – as either a safety net or evidence of “sking in the game” Other Risks

  • Bribery & Corruption
  • Capital Flight
  • Correspondent banking
  • Fraud
  • SWIFT Payments
  • Offshore banks
  • Complex structures
  • Financial engineering requests using Repo’s 

Course Conclusion and Review / Feedback

The trainer had a highly successful, long and varied “fast track” career in Lloyds Bank which led him to a very senior management position in the bank’s Corporate Banking  Division at an early age. He was then “head hunted” to join a merchant bank at main board director level. He now has over 40 years’ trade finance experience.

The trainer has been a freelance trade finance training consultant since retiring and is currently an external Master Trainer at HSBC, where he has delivered major trade and structured trade finance-related courses. He has also taught similar programs at Bank of China.

He is a highly adaptive, hands-on and highly sought-after trade finance trainer who always receives excellent feedback from delegates. He is comfortable training at any level of seniority and experience, from “black belts” to novices. In addition to his trade finance specialism, his expertise includes but is not limited to Risk Management, Trade Finance, Regulatory Compliance, FCC & AML and all aspects of Corporate, Private & Retail Banking. He is also a highly experienced soft skills trainer and has completed numerous “train the trainer” assignments.

  • Understand why trade finance is generally low risk for credit losses – IF done properly
  • Appreciate the range of risks involved in trade finance
  • Understand the controls and mitigants available and how well they work in reality
  • Be able to categorise risk according to client size and strength
  • Appreciate the mechanisms of the working capital cycle
  • Recognise that Structured Lending facilitates easier and closer control
  • Appreciate why some structured trade finance lines can sometimes enable the bank to assist a weak or extended balance sheet
  • Understand why trade finance is considered high risk for AML
  • Be able to see risks in the round
  • Be much better equipped to assess, consider and support trade finance propositions based on a comprehensive understanding of both the risks and the mitigants available

  • Redcliffe has been training successfully for more than 20 years and this is one of our core competencies
  • We are fortunate to have been appointed as master trainers to two of the world’s largest trade finance banks, both of whom are at the cutting edge of new and traditional trade finance methods so we are well aware of what is happening in the marketplace right now
  • Your course director is a highly experienced practitioner who is still very active in the training and consultancy world and will pass on his experiences and observations during the numerous discussion sessions
  • We do not use academics, only real-world practitioners
  • The Risk in Trade Finance & Trade Finance Products course uses real-life case studies to bring the learning points to life and we can adapt these to meet the business profile of the delegates
  • The two sessions are highly interactive with group discussion encouraged including the opportunity to bring current cases into the forum
  • We are only as good as delegate feedback and so far this has always been excellent

This Risk in Trade Finance & Trade Finance Products course is a ‘must know’ for:

  • All staff involved in managing and mitigating risks in trade finance
  • Senior and line managers seeking to gain a better understanding of the risks and mitigants involved in trade finance
  • Relationship managers and their teams
  • Credit Risk and Compliance Officers who are charged with overseeing the risks in trade finance and trade finance products
  • Department Heads. Team Leaders and Supervisors
  • Anyone with an interest in the topic or whose roles and responsibilities cover this area 

Trade Finance remains the engine at the heart of global economic growth with China and the USA dominating in terms of importance.

Trade finance risk is an interesting paradox. It has always been a business area where if done well, credit losses are typically very low (mainly fraud, in practice), fee income opportunities are high and some of the products are very efficient users of capital. On the other hand, numerous Global Banks have made substantial losses in recent years lending to clients where on paper at least, the risks seemed low.  In addition, it is a very high-risk area for Financial Crime. It is estimated that as much as $2trillion is laundered annually, much of it using trade finance.

This practical and highly interactive Risk in Trade Finance & Trade Finance Products course is designed to assist trade finance practitioners in all three lines of defense roles, to understand fully what risks are involved and how to manage and mitigate them. It focuses particularly on risk assessment, delivery, need identification, and selling opportunities. The course encourages delegates to see issues from both the client’s and the bank’s relationship manager’s viewpoint.


Highly interactive workshop-style with detailed real-life case studies and examples. Delegates are free to bring their own cases/examples to the sessions.

Level of Preparedness:

Beginners are welcome although a working knowledge and understanding of the methods of financing International Trade would be helpful.


Have this course presented In-House

  • On a date, time and in a location of your choice
  • Topics expanded or deleted to your bespoke requirements

Have this course pre-recorded

  • Full course recording edited exclusively for your company
  • Files converted to enable housing on your LMS
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