This paper offers a fresh perspective from which to gauge the ongoing viability of a firm. While investors, lending institutions and trade creditors share common concern with respect to risk, they differ according to both the time horizon and their interest in the ongoing viability of the firm. Using a synthetic credit score and the time tested Altman’s Z-score, this paper presents both measures along a simple X, Y axis plot that aims to provide a perspective of risk that is both straightforward and intuitive.

Much can be done to improve the process of managing risk in the commercial lending environment. Recent advances in technology, continuous academic progress and a groundswell of practitioners motivated by the state of the economy create the ideal atmosphere for change. While pessimists remain paralyzed in the midst of what many refer to as the ‘perfect economic storm’, tomorrow’s leaders are busy retooling processes that will make them stronger and better able to compete. This paper puts forth one change-opportunity that vastly improves the commercial lender’s insight into loan-portfolio risk and opens the door to a new era of better risk management.