What is the RiskScore?
The CreditorWatch RiskScore:
Provides an indication of a business’ creditworthiness
Predicts the likelihood of business insolvency or failure in the next 12 months
The RiskScore ranks entities based on their risk:
Across 14 credit ratings (from A1 to F), and;
Using a numerical score from 0-850 (higher score is lower risk)
Why are we updating the RiskScore algorithm?
As new data sets and new technology become available to us, we are able to improve our algorithm to make it more accurate and predictive.
Further, our research into historical events have helped us to identify and better understand risk factors that contribute to likelihood of businesses entering into insolvency in the next 12 months.
How often is the RiskScore algorithm updated?
The RiskScore algorithm is updated on a regular basis, depending on the availability of new data sets, enhancements in technology and trends/insights gathered.
CreditorWatch updates the RiskScore algorithm when there are enough substantial changes to avoid unnecessary impact to customers who make credit decisions based on our RiskScores.
What are the changes to the RiskScore algorithm?
The changes to RiskScore algorithm include, but are not limited to:
Business Classification | More precise classification of ‘Large Business’. |
Trusts | Addition of more specific trust segments used to calculate RiskScore |
Defaults | Weighting of defaults to calculate RiskScore has been recalibrated to consider recency of default registrations and number of unique claimants. |
Cross Directorships | Nature of cross directorships now contribute to RiskScore calculation |
ANZSIC Codes | Addition of more precise industry classifications used to calculate RiskScore |