PC Retail

Over the past few years (it's difficult to be too specific with these mechanisms) multiple areas of the IT trade have become increasingly reliant on credit insurance in order to maintain a fluid form of trading. This is by no means unique to our industry, and can even be advantageous to a business – until that cover is reduced or taken away.

Insurance for retailers and the firms that supply them across all industries is in a state of review, and in many cases is resulting in large-scale reductions. It would be easy to paint a picture of malevolent, multi-national insurance firms causing havoc for honest, hard working retailers – but the general principle of insurance is essentially a mathematical one.

We take it as a given that if we have a car accident, our insurance premiums will go up. If multiple prangs and accidents occur, the driver will have to pay significantly more to insure his car – because statistically, he is more likely to have another one, and the insurance company will have to pay out more to repair it. In poker, it's called pot-odds – the risk of the bet compared to the potential rewards. At retail, it's simply called risk assessment.

That will of course come as little solace if the practice is currently damaging your trade. However, the finance industry seems far from oblivious or indifferent to the growing plight. According to financial broker Aon, it and other similar firms are currently lobbying Government to set up a safety net for companies affected by the retraction of credit, such as that already in place in France.

There's been so much media attention and speculation as to the real extent and length of this global financial crisis, much of which has been contradictory and confusing. Essentially, the wide-scale reduction of credit is one of the main tangible effects all the media rhetoric and speculation has danced around for over a year now. But now the phoney war is over, and the real fight has begun. Adaptability, as ever, will be your most potent weapon.