Economy & Credit Chest

Of course in some situations it may not be practical or wise to involve everyone in the internal assessment from the start. One strategy I use is to involve different groups at different stages. You may start with key leadership and then, once you have their commitment, begin to move down the organization. As you assess various areas of the organization, you begin to involve those people in the assessment. As you do, be sure to communicate clearly the purpose and scope of the assessment to alleviate fears.

While you may not be able to involve everyone, it’s essential to communicate information about the assessment to people inside the organization. Tell them what you know, what you are doing, and why. Be as honest and open as you can. It’s a great first step in moving along the Partnership Continuum and increasing your Partnering Intelligence.

The senior and mezzanine return profile has an option-like feature, like short puts out-of-the-money (BBB) and far-out-of-the money (AAA) in return terms. When investment grade default rates rise significantly above their long-term historical average, mezzanine notes become impaired. On the other hand, CDS portfolio deterioration causes in general mark-to-market losses and might result in rating downgrades with respect to the notes.

Assumption: The annualized 5-year cumulative BBB credit loss rate is 0.20 percent, assuming a recovery rate of 40 percent. The size of the first loss tranche equals 4 percent, the size of the BBB-note 2.5 percent and the AAA note 3 percent in the example with a portfolio of BBB rated CDS.

Many people have trouble in coming up with new ideas or solutions to a problem. The answer often lies in fostering innovation, by creating the right conditions to be innovative or simply to see the best way forward. If this is to work and be sustainable, the climate for decision-making must be as positive, open and encouraging as possible. Linked with this is the need for people to feel valued. If they do not, there is a risk that they will be negative about the change, reactive rather than proactive.

Or they may decide to leave. One way of fostering innovation is to encourage employees to question the way things are done or decisions that have been made. Removing or minimising barriers (such as bureaucracy and hierarchy) can drive innovation, and so can an ability to exert mild pressure, perhaps by setting deadlines. Techniques that help spur creativity and innovation include brainstorming and mind mapping, as they help individuals to come up with ideas and to see patterns or organise information in such a way that patterns and ideas develop.