S&P Capital IQ has joined forces with business information publisher Bureau van Dijk (BvD) to expand BvD’s FACT platform – a framework to manage credit risk processes – with S&P Capital IQ’s methodologies for analysing credit risk.
The expanded FACT platform now includes S&P Capital IQ’s industry and regional-specific quantitative models, which provide a variety of credit scores and probabilities of default (PD) on private and public corporations and financial institutions globally. The risk indicators range from point-in-time to through-the-cycle estimates.
Quantitative models often support the credit origination process by providing a simple means of accessing credit scores and PD calculations. They can also be used to benchmark the Internal Rating System (IRS) output to support validation processes, while providing rapid surveillance of existing counterparties to create an early warning system for the IRS.
Also available via the FACT platform are S&P Capital IQ’s sector-specific PD and Loss Given Default (LGD) credit assessment scorecards, which are used to analyse various types of corporate, specialised lending, financial institution (FI) and public finance exposures. The scorecards consider both qualitative and quantitative risk factors. Existing clients include a variety of credit sensitive institutions, including banks and insurance companies that wish to have an IRS to comply with the Internal Ratings Based (IRB) approach as described in the Basel accords or Solvency II.
Both the credit assessment scorecards and the quantitative models can be automatically populated with data from any source. Efficiency gains can be achieved by combining BvD’s FACT platform with S&P Capital IQ’s methodologies.
“Regulation is one factor driving the adoption of effective credit risk modelling and workflow solutions, but these processes are also taking centre stage in economic capital management, pricing and portfolio-driven business strategy,” said Michael Baker, head of solutions and services for S&P Capital IQ. “Combining our PD and LGD credit assessment scorecards together with the quantitative models through BvD’s FACT offers our clients the ability to seamlessly combine best-in-class methodologies and IT.”
The FACT credit risk platform manages rating and limit approval processes and is designed to be configured with customers’ internal procedures. Its flexibility potentially allows the integration of any financial data source with the user’s choice of models and scorecards.
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