Configuring Company custom check
Company custom check is a data provider you can use to run these checks:
Geopolitical risk check
Financial health sentiment risk check
Operational risk check
Geopolitical risk check
How it works
The Geopolitical risk check examines events at a country level, such as monetary policy instability, social riots, and terrorism, that can be used in a company risk assessment.
Information used to run this check
To run the check, complete all the required fields in the company profile. The Company number field must be filled out to generate the BvD ID.
Overall results of the check
The Company custom check generates a Country risk score by Moody’s, which draws on various economic, social, political, demographic, and survey data and combines these with economic forecasts and subjective assessments of economic policy and institutional risks. The check lists the information used to run the check and then shows the summary of the results. The score is given on a scale from 0 to 100, where a higher score represents more risk.
The scale categories of the risk score are the following:
Low is a score between 0 to 34.
Moderate is a score between 35 to 44.
Serious is a score between 45 to 59.
Severe is a score between 60 to 100.
To monitor risk, you can set a threshold that triggers an additional task called Log mitigation actions, which is added to the Due diligence tasks list. In this task, you choose one or more actions to mitigate the high risk the supplier has.
Country risk score by Moody’s is calculated quarterly and consists of a weighted average of numeric scores assigned to six specific risk categories. Each of the six categories has additional individual drivers contributing to the score:
Macroeconomic risk relates to the cyclical nature of the economy and the quality of monetary and fiscal policy.
Business risk reflects operational uncertainty from local conditions that businesses face daily.
Financial risk relates to the possibility of asset and liability valuation shifts due to interest rate and exchange rate shocks.
Social risk relates to the probability of large-scale social upheaval or individual-level risks, such as crime and disease, affecting human resources.
Political risk reflects policy uncertainty or the possibility of significant shifts in political conditions.
Security risk reflects the risk to human life and property from war, terrorism, geopolitical instability, natural disasters, and climate change.
The overall score of the results is the same as Moody’s Analytics country risk indicator, also known as MACRI. To keep the results relevant to the Geopolitical risk check, the overall detailed report has some differences compared to MACRI.
Caution
It is important to note that MIS country rating is not the same as Country risk score by Moody’s, and it is a narrower view without all geopolitical risk calculations present in the Country risk score.
Using the Country risk score has several key advantages, which include:
Coverage: The breadth of data and country coverage sets this score apart from other offerings. Country risk score is based on more than 100 indicators and has a broad country coverage, covering 191 countries.
Comprehensive assessments: The Country risk score uses subjective risk assessments from Moody's economists to complement the objective risk assessments generated by the data. This method depends on the frequency of events in the past rather than their probability in the future.
Uniform comparison: The Country risk score compensates for gaps in data availability by using subjective ratings to impute missing data, allowing Moody's to better track and compare countries over time.
Testing your configuration
Once the Geopolitical risk check is configured, follow these steps in your demo environment to test whether it's working as expected.
To test your configuration:
After creating the profile, run the Geopolitical risk check. If the check returns a risk score, it’s working as expected.
Financial health sentiment risk check
How it works
The Financial health sentiment risk check rates the negative credit sentiment of news and media that can be used in a company risk assessment.
Information used to run this check
To run the check, complete all the required fields in the company profile. The Company number field must be filled out to generate the BvD ID.
Overall results of the check
The Company custom check generates a Credit sentiment score for an organization by examining the negative news articles and giving them a daily score. The check lists the information used to run the check and then shows the summary of the results. The score is provided on a scale from 0 to 100, where the higher the score is, the more negative current news about the company there is.
The Financial health sentiment risk check categorizes news into five categories, assigning each a different weight of importance for the overall score. This means that the more weight the category has, the more important it is to the overall result.
Bankruptcy/insolvency has a score weight of 100.
Default/missed payment has a score weight of 75.
Credit rating downgrade has a score weight of 30.
Profit warning has a score weight of 20.
Compliance issue has a score weight of 2.5.
The Financial health sentiment risk score ratings are divided into four categories:
Weak if the score is between 0 and 2.
Moderate if the score is between 3 and 4.
Strong if the score is between 5 and 14.
Severe if the score is between 15 and 100.
Testing your configuration
Once the Financial health sentiment risk check is configured, follow these steps in your demo environment to test whether it's working as expected.
To test your configuration:
To run the test, create a company profile.
After creating the profile, run the Financial health sentiment risk check. If the check returns a risk score, it’s working as expected.
Operational risk check
How it works
The Operational risk check evaluates the supplier’s risk and determines whether there is a need to take mitigation actions that can be used in a company risk assessment.
Information used to run this check
To run the check, complete all the required fields in the company profile. The Company number field must be filled out to generate the BvD ID.
Overall results of the check
Moody's Orbis generates the Supplier performance risk score that is a risk indicator for the next 12 months. The check lists the information used to run the check and then shows the summary of the results. The score is given on a scale from 0 to 100, where a higher score represents a greater risk of the supplier not delivering on time or with expected quality.
Negligible is a score between 0 to 24.
Very low is a score between 25 to 39.
Low is a score between 40 to 58.
Low to medium is a score between 59 to 63.
Medium is a score between 64 to 73.
Medium to high is a score between 74 to 78.
High is a score between 79 to 83.
Critical is a score between 84 to 95.
Catastrophic is a score between 96 to 100.
To monitor risk, you can set a threshold that triggers an additional task called Log mitigation actions, which is added to the Due diligence tasks list. In this task, you choose one or more actions to mitigate the high risk the supplier has.
Testing your configuration
Once the Operational risk check is configured, follow these steps in your demo environment to test whether it's working as expected.
To test your configuration:
To run the test, create a company profile.
After creating the profile, run the Operational risk check. If the check returns a risk score, it’s working as expected.