Written by WatersTechnology
OVERVIEW
With the possibility of a global recession and rising corporate default risk, businesses need early warning tools to assess risk. Lenders and corporations often struggle with limited or no financial information and limiting models to measure risk of their portfolios and partner/client entities. Moody’s Analytics credit risk solutions, including CreditEdge and RiskCalc, help to meet the industry’s needs and provide actionable insights to businesses of all sizes and types with greater speed and accuracy.
THE SOLUTION
Moody’s Analytics CreditEdge and RiskCalc offer a comprehensive approach to assessing the default and recovery of public and private firms, financial institutions, and project finance transactions. The firm’s proprietary models generate accurate, forward-looking probability of default (PD) or expected default frequency (EDF) measures, loss given default (LGD) and expected loss (EL) credit measures.
SECRET SAUCE
Moody’s Analytics credit risk models are built on decades of global private company data, coupled with proven techniques to calculate credit risk from equity signals. They’re validated over credit cycles and informed by financial institutions who use them to underwrite loans, manage portfolio risk and determine loan loss provisions. The firm recently incorporated payment data and alternative signals into its models through AI. It also provides pre-calculated credit risk measures for over 400 million companies globally.
RECENT MILESTONES
Advanced technology: The new EDF-X API provides scale and performance to facilitate programmable access, enabling a tighter link with customer applications and other Moody’s products.
Simple execution: More than 100 identifiers to get the best credit assessment for any company. Customers can use their own data to make adjustments.
Depth of information: Moody’s Analytics Early Warning Score categorizes risk into four buckets and PD triggers for every company. Historical trends and risk comparable for over 300,000 peer groups.
FUTURE OBJECTIVES
EDF-X pre-calculates credit measures for any company in the world. Moody’s Analytics will be adding more data and analytics to the EDF-X web platform―which is launching soon―such as economic news, credit sentiment, alternative signals and alerts. Customers, whether large corporations or small enterprises, will be able to manage their portfolios with all the information needed in one platform
“CreditEdge is an indispensable tool that complements and enhances our existing credit monitoring framework.”
Chee Leong Ooi, Asia and Oceania credit department, corporate research line, Mizuho Bank
“In the face of rapid change in the economy, financial markets and technology, we’re making significant investments in our award-winning solutions so they’re more scalable, easier to use, and have industry-leading coverage for customers to score all their exposures. EDF-X is this next step forward. We’re committed to providing the best actionable information for credit decision-making, whether you’re a bank, an asset manager or managing corporate counterparty risk.”
Ari Lehavi, head of predictive analytics, Moody’s Analytics
