Pricing data triggered finance in the deep sea transportation industry: a study of operational risk modeling, by Laurens Coolsen (with SCF-Solutions)
June 8, 2013
This master thesis describes a project conducted at SCF-Solutions in Breda. The focus of the thesis is to determine the premium to charge carriers and the capital buffer required to remain solvent when Data Triggered Financing is offered in the Deep Sea Transportation industry. The first part of the research is qualitative, where an overview of the Data Triggers and the accompanied risks is presented. Currently, pre-payment of the carriers’ invoices takes place right after the invoice has been approved by a Freight Auditor. When moving upward in the Supply Chain and carriers will be paid while goods or even before goods are in transit, the operational risk increases which affects the size of the premium to charge for pre-payment. In the second part, a tool based on insights from literature has been developed for the quantification of the premium to charge when offering Data Triggered Financing. In addition, the tool quantifies the capital buffer which needs to be kept by SCF-Solutions to remain solvable over the upcoming year.