The 96% Accuracy Difference

Rely on our proven, proprietary process and FRISK® score -- now powered by credit manager behavior

Uncover, prioritize and monitor your financial risk with our proven process designed explicitly to uncover the financial stress of public companies. Driven by the unique, proprietary FRISK® score, our process focuses your efforts on your riskiest public companies – what we call the “red zone” of risk.

And, as of June 2016, the score just got even better -- now powered by credit manager behavior. Read more here

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ASSESS

We’ll create and analyze your portfolio for you, showing where your dollar risk exposure lies.

PRIORITIZE

We stratify your accounts by risk level using the FRISK® score, prioritizing the “red zone” of high risk.

INVESTIGATE

Our tools let you drill deeper on critical financials and risk background on red zone companies.

MONITOR

We automatically follow changes to risk, ratings and financials with timely, relevant email news alerts.

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The Core of the Process: The FRISK® Score

The core of the process is our proprietary FRISK® score, which indicates a company's level of financial stress, based on the probability of bankruptcy over a 12-month horizon. It’s proven 96% accurate in predicting U.S. public company bankruptcy during this time horizon.

As of June 2016, the score became even more predictive. We now factor in, when available, anonymous, aggregate crowd-sourced usage data from our subscribers. As credit managers and supply chain professionals in Fortune 1000 organizations, they are a distinguished group, and manage billions of dollars of credit risk. When they are concerned with a risky company, they investigate the company more closely, in what we've found to be distinct behavioral patterns.

With this anonymous, aggregate behavior included, the FRISK® score is more sensitive and accurate, moving a relatively small but largely important segment of businesses from risky to riskier. Essentially, when credit professionals start looking more closely as a group, there's usually something to be seen.

The FRISK® scores are a mathematically-derived opinion, calculated daily with the most recent information in our database, using a model created by our head of analytics Dr. Camilo Gomez.

The score is unique in the commercial credit space because it does not use payment data, which our research shows to be misleading for predicting public company financial stress. The model incorporates a number of powerful risk indicators including:

  • A “Merton” type model using stock-market-capitalization and volatility. Merton models are widely used to measure the credit risk of a corporation’s debt and potential for credit default.
  • Financial ratios, including those used in the Altman Z”-Score Model
  • Bond agency ratings from S&P, Moody’s and Fitch (when available)
  • New: Crowd-sourced CreditRiskMonitor subscriber usage data

 

Bankruptcy Chart

The FRISK® score is reported on a scale of 1-10, with 1 being the most risky. A FRISK® score of 5 represents average financial stress and risk of potential bankruptcy.

The structural statistical model used for the FRISK® score was developed and back-tested using company data and bankruptcies between 2003 and 2013. This period covers 9,600 unique businesses and includes 580 bankruptcies over a period including the Great Recession.

As of June 2016, the score also factors in crowd-sourced usage activity patterns from our subscribers. 

Public company risk can hide in plain sight, but it doesn’t have to take you off guard. Rely on our trusted process, anchored by the FRISK® score, to help you get – and stay – ahead of severe financial stress.

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