Corporate Risk Score
1. Corporate risk score
The Corporate Risk Score indicates a company’s likelihood of default, defined as ceasing operations within the next 12 months. Score ranges from 0 to 1000, with higher values indicating lower default risk. Each score range corresponds to a predefined Probability of Default (PD) based on a standardized Master Scale.
Overall score (0–1000): the score at the updated date, the higher the score, the lower the risk.
FG risk grade: from FG-1 (negligible risk) to FG-18 (defaulted).
PD (Probability of Default): the probability of a business defaulting in 12 months.
Financial year end used for scoring: is usually the year immediately preceding the scoring year or the year before that.
Model segmentation: more accurate classification of default risk, classified into 6 segments according to VSIC classification of main business sectors and sizes according to the latest year's financial statements.
Trade credit limit recommendation: forecast of trade liabilities for the whole year, based on growth in business activities in recent years, probability of default, qualitative factors such as negative news, tax debt.
Historical change chart: shows scores and PD over periods (year/quarter/month), and compares them to the model segment.
Interpretation: The main measure helping readers quickly identify the current risk level and volatility trends.
2. Risk Scale and Interpretation
Provides FG-1 to FG-18 scale tables with interpretation.
Each class comes with a PD (%) for reference.
Interpretation: Help readers understand the risk level corresponding to the score, easily compare the scores of businesses in different segments.
3. Score breakdown
Divide the risk factors into three groups:
Financial risk
Organization-level non-financial risk
Industry-level non-financial risk
Interpretation: Indicates which group of factors has the greatest impact on the business risk score.
4. Risk component analysis
This section outlines the key factors contributing to a company's risk score, supported by benchmarked indicators that compare the company against its segment. This enhances clarity and objectivity in assessing relative risk. This structure highlights the most influential drivers and whether their relative position within the segment is favorable or unfavorable.
Financial risk: growth coefficient, profit, operational efficiency, liquidity, leverage, cash flow, scale.
Organization-level non-financial risk: business activity history, size, statutory compliance, news sentiment.
Industry-level non-financial risk: import trends, export trends, business suspension rate, business reactivation rate, new business registration rate.
Each metric is presented with score, contribution (%), median and relative. In which:
Score: the calculated score of each individual driver for the company, grouped into higher-level categories for interpretability.
Contribution: the impact weight of each driver on risk score. Higher values indicate stronger influence.
Median: the segment median value for that driver, used as a reference to benchmark the company’s standing.
Relative: The difference between the company’s score and the segment median, showing whether the driver improves (positive sign) or worsens (negative sign) the overall segment median score.
Comparison with other periods:
Function comparing risk scores by factor across two customizable periods:
Displays the values of the comparison period and the base period, along with the changes between the two (green = improvement, red = deterioration).
Interpretation: Helps identify which factors drive the company’s risk score higher or lower, adds a comparative dimension against peer groups in the same segment, and highlights whether each factor shows an improving or worsening risk trend.
5. Relative contributions
The graph shows each factor that contributes to pulling the score up or down compared to the segment median.
Interpretation: Clarify the strengths and weaknesses of the business when comparing to the segment.
6. Commentary
Summarize the current score compared to the previous year, the risk trend.
Highlight key indicators.
Qualitative assessment: the business status comparing to the model segment.
Interpretation: An overview for readers to better understand trends, factors affecting scores, position compared to segments.
7. Forward looking PD term structure
The Probability of Default (PD) Term Structure represents the estimated likelihood that a company may default over various time horizons. It illustrates how default risk evolves over short- and long-term periods, offering a forward-looking view of risk exposure. The term structure also incorporates macroeconomic adjustments to account for anticipated changes in the economic environment, enhancing its relevance for future-oriented risk assessments.
The table shows the probability of default (PD) by month (1–12 months) and by year (1–35 years) corresponding to the segment of the organization, considering the risk grade transition probabilities using historical data of the organization in the same segment and changes in macroeconomic factors in the future.
Allows for assessment of short-term and long-term risks.
Interpretation: Supporting the decision-making of term credit, assessing future risks depending on macroeconomic conditions according to IFRS 9.
8. Score Distribution
Provide three score distribution charts:
Industries according to VSIC level 3 classification.
Business size (micro, small and medium, large).
Model segmentation.
The charts show the frequency of allocation of risk grades FG-1 to FG-17 at the latest update date, counting only active businesses.
Interpretation: Help readers quickly determine where the business is in the overall distribution, thereby assessing the relative risk position of the business compared to important reference groups.
9. Frequently Asked Questions (FAQ)
How often is the corporate risk score updated?
The score is updated on a monthly basis or when there is information about important events (new financial statements, litigation, negative news, legal changes).
What is the difference between FG and score?
FG is a risk grade (from FG-1 to FG-18), and a score of 0–1000 is a quantitative value. FG is inferred from the score interval and the corresponding PD.
If the organization does not have financial statements in the last 2 years, where do the scores come from?
The system will depend mainly on the non-financial model, hence the score is contributed mainly by business registration data, obligation payment behavior, litigation, industry and news. The financial model still returns scores for this case, however, the score will be relatively low compared to the segment due to the lack of up-to-date financial reporting data.
What can the risk score be compared with?
Users can compare with the industry median, business group of the same size and model segment.
When should I pay special attention to the score?
When the score drops sharply compared to the previous period, when FG falls into the FG-14 to FG-17 range (very high risk, near default), equivalent to PD exceeding the threshold of 20%.
How is the trade credit limit recommendation calculated?
The trade credit limit recommendation is determined based on a combination of the company’s historical data, projected future trends, and risk adjustments. Specifically:
Projected transaction scale: The system references past payment obligations and revenue growth in recent years to estimate trade credit needs for the upcoming period. If the company lacks sufficient financial data, the limit is assigned based on revenue scale and industry classification to ensure reasonable comparability.
Risk scaling: The projected limit is adjusted according to the PD on the standardized risk scale, combined with financial health indicators such as liquidity and interest coverage. Companies with lower risk or stronger financial indicators are assigned higher limits, while higher-risk companies face more restricted limits.
Additional qualitative factors: Negative media information, overdue tax obligations, or enforcement by suspension of use of invoices will result in downward adjustments of the limit.
Does the score change for each finance and credit product?
The score is the overall risk. To make decisions by product, credit institutions can set additional cut-off thresholds for short-term, long-term, or specific products.
In what formats can the report be exported?
Users can download PDF reports or access data via API (depending on the service plan).
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