Setting the Record Straight: Financial Risk In Public Companies

Public company financial risk can impact cash flow, supply chain and reputation.

Risk professionals are usually concerned with data and facts. But we often hear five assertions about public company financial risk that are very common, very persistent -- and dead wrong. It’s time we put these myths to rest.

In the infographic “5 Myths About Risks in Public Companies” we share the truth about public company financial risk, based on years of bankruptcy data and extensive research.

Take the popular assumption that private companies are riskier than public companies, for example.  When we examine what’s actually happened in credit markets and analyze actual portfolios, it turns out that public company failure has a much larger impact.

       See Myth #1, to learn why public company failures actually have a much larger impact than their numbers suggest.

Or consider the common belief that gathering financial information for public company credit analysis is an easy process. We ran the numbers. You may be surprised to learn that adapting a more efficient means of aggregating data and spreading financials can result in a dramatic time savings.

      See Myth # 4, to learn how your department could save 8 months of every year per hundred public companies analyzed, with a simple process change.

Here’s another idea worth challenging: the long held belief in the value of payment history as predictive of public company financial health. Actually, studies show that for public companies, payment history often misses the mark.

      See Myth # 5, to learn why payment history is a poor metric for assessing the credit worthiness of public companies -- and what to use instead.

Check out the entire infographic, and learn the truth about all five myths. Shifts in thinking on each of these issues – from the underestimation of risk in public companies, to an inefficient process for public financial data-gathering -- can have a profound impact on how you manage your supply chain, revenue and reputation.

And once you learn what’s a myth and what’s reality, we hope you’ll help to set the record straight with your colleagues and peers!

Check Out The Infographic: 5 Myths About Risks in Public Companies

About CreditRiskMonitor

CreditRiskMonitor is a financial news and analysis service designed to help professionals stay ahead of public company risk quickly, accurately and cost-effectively. More than 35% of the Fortune 1000, plus thousands more worldwide, rely on our commercial credit reporting and predictive risk analytics for assessing the financial stability of more than 56,000 global public companies.

At the core of CreditRiskMonitor’s service is its 96%-accurate FRISK® score, which is formulated to predict public company bankruptcy risk. One of four key components calculated in the FRISK® score is crowdsourced subscriber activity. This unique system tracks subscribers' patterns of research activity, capturing and aggregating the real-time concerns of what are essentially the key gatekeepers of corporate credit. Other features of CreditRiskMonitor’s service include timely news alerts, the Altman Z”-Score, agency ratings, financial ratios and trends. CreditRiskMonitor’s network of trade contributors provides more than $150 billion in trade data on their counterparties every month, giving them visibility into their biggest dollar risks.