F » Topics » Overview.

This excerpt taken from the F 10-K filed Mar 10, 2005.
Overview. Ford Credit is exposed to a variety of risks in the normal course of its business activities. In addition to counterparty risk discussed above, Ford Credit is subject to the following additional types of risks that it seeks to identify, assess, monitor and manage, in accordance with defined policies and procedures:

  •  Market risk — the possibility that changes in interest and currency exchange rates or prices will have an adverse impact on operating results;
  •  Credit risk — the possibility of loss from a customer’s failure to make payments according to contract terms;
  •  Residual risk — the possibility that the actual proceeds Ford Credit receives at lease termination will be lower than its projections or return rates will be higher than its projections; and,
  •  Liquidity risk — the possibility that Ford Credit may be unable to meet all current and future obligations in a timely manner.

      Each form of risk is uniquely managed in the context of its contribution to Ford Credit’s overall global risk. Business decisions are evaluated on a risk-adjusted basis and products are priced consistent with these risks. Credit and residual risks are discussed above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Critical Accounting Estimates” and liquidity risk is discussed above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Liquidity and



Item 7A. Quantitative and Qualitative Disclosures About Market Risk (Continued)

Capital Resources — Financial Services Sector — Ford Credit”. A discussion of Ford Credit’s market risks is included below.


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