Rethinking how multinationals manage credit risk

At the Axco Global Insurance Americas 2026 event in Austin Burkhard Wittgen, Global Head of Multinationals for Willis Credit Risk Solutions, joined Matt Dougherty, Senior Manager Risk & Insurance at LyondellBasell, to explore how multinational companies can rethink one of their most complex exposures – credit risk.

LyondellBasell, headquartered in Houston, Texas, is a global chemical and plastics producer generating around $30 billion in annual revenue. The company employs roughly 19,000 people across a large international manufacturing footprint and produces polymers, olefins and other chemicals used in packaging, transportation, healthcare and infrastructure.

Reassessing credit risk in a changing landscape

For many multinationals, credit risk occupies an unusual space. Factories are insured. Supply chains are mapped. Cyber exposure is increasingly quantified. Yet receivables – often representing hundreds of millions or even billions of dollars – are frequently managed through established processes rather than re-examined through a strategic risk lens. That observation shaped Wittgen and Dougherty’s discussion. The session focused not on insurance products but on a more fundamental question:

How do multinational companies decide which credit risks belong on their balance sheet, and which should be transferred elsewhere?

A deliberate strategy can still be re-evaluated

Prior to the project, LyondellBasell had no credit insurance in place in North America. As Dougherty explained, this decision reflected a deliberate strategy supported by a mature credit-management framework, experienced credit professionals and a range of risk-management tools that had successfully supported the business for many years.

North America had historically been managed through strong internal credit disciplines and active portfolio oversight. The question therefore was never whether credit risk was being managed – it was whether changing market conditions warranted a fresh evaluation of how much risk should continue to be retained and whether additional tools could complement an already effective framework.

As Wittgen observed: “The most important question is not whether a company buys insurance. The question is whether it can explain, with data, why it chooses to retain a particular risk.”

That distinction became one of the central themes of the discussion. A risk retention strategy can be entirely rational. But like any strategic decision, it should occasionally be revisited as economic conditions, industry dynamics and portfolio concentrations evolve.

When the environment changes, assumptions should be tested

The discussion took place against a backdrop of economic uncertainty, geopolitical tension, industry disruption and rapidly evolving customer environments. None of these factors suggested that LyondellBasell’s existing controls were inadequate. Instead, they created an opportunity to revisit whether the assumptions underlying historical risk retention strategies still held true in the current climate.

Drawing on conversations with multinational CFOs, treasurers and risk managers around the world, Wittgen observed that companies routinely reassess property, cyber and supply chain exposures, yet tend to review credit risk retention strategies far less often.

The challenge is not identifying whether risk exists – it is determining which risks continue to belong on the balance sheet and which may warrant alternative treatment. That question, he emphasized, can only be answered through analysis.

Begin with the portfolio, not the policy

Traditionally, conversations about trade credit insurance start with policy structures, market capacity or pricing. Wittgen argued that the first question should be different: start with the portfolio itself. The objective is not to judge insurance as good or bad, but to quantify risk first – then decide whether retention, transfer or a mix of the two leads to the best financial outcome.

At LyondellBasell, this analytical approach changed the internal dialogue. Teams moved from opinion-based debate to data-driven evaluation. Instead of asking whether insurance was necessary, they asked which exposures could generate material financial consequences. As Dougherty noted: “The discussion became less about insurance and more about understanding where capital was exposed to low-frequency but potentially high-severity outcomes.”

Frequency and severity are separate conversations

Dougherty and Wittgen distinguished between frequency risk and severity risk – a distinction that can reshape how credit organizations view their exposures. Routine losses can often be managed effectively through monitoring and collection processes. Problems arise when the same tools are expected to protect against extreme scenarios. As Wittgen noted, this assumption can create a blind spot. A company may manage ordinary credit losses for years yet still face a single customer failure or market disruption that dramatically changes the scale of impact. Understanding which losses reflect normal business volatility, and which represent balance sheet events, shifts the entire conversation.

Selectivity, not adverse selection

Analysis of the portfolio led to a selective rather than blanket approach to risk transfer. Instead of transferring every exposure, the team focused on concentrations with the potential to influence corporate results – while retaining meaningful risk within the company.

The common market question soon followed: isn’t that adverse selection?

Wittgen’s view was clear. Adverse selection results from hidden information and limited transparency. This approach was the opposite.

Insurers received full visibility into the analytical framework and portfolio logic behind each retention decision. Exposures were selected based on potential consequence, not undisclosed concerns. That level of transparency was central to building credibility with both underwriters and the insured.

Organizational challenges over technical challenges

According to Dougherty, the main hurdles were organizational rather than technical. Two questions recurred:

• Why change something that has worked for years?
• Does buying protection signal a lack of confidence in the credit team?

The answers lay in data. Scenario analysis replaced emotional debate and historical reliance. Meaningful retention validated the credit team’s capability instead of diminishing it. Most importantly, multiple corporate functions developed a shared understanding of risk and a common language to describe it.

A lesson for every multinational risk manager

As Dougherty concluded: ‘Uninsured’ and ‘analyzed’ are not the same thing. A company may choose to retain all its credit risk – and that can be entirely rational. But it should be able to explain the decision with data, not history. Wittgen expanded the point. The real debate is not between buying or not buying insurance, but about understanding risk with greater precision:

• Which exposures are strategic?
• Which are manageable?
• Which belong on the balance sheet?
• Which should be transferred?

And can those decisions be explained with evidence?

For risk managers, treasurers and CFOs, that may be the most important question of all. Not every company should buy credit insurance – but every company should be able to demonstrate that the risks it retains are deliberate, measured and fully understood. Because in an increasingly uncertain world, retaining risk by choice and retaining risk by habit are two very different things.

As the risk landscape continues to evolve, staying informed and considering the implications for your organization will be increasingly important. To find out more about emerging risks and how you can prepare for what comes next, get in touch with our team.