Data, Technology & Risk Management: From smart data to predictive risk management solutions

Previously in our Data, Technology & Risk Management series we looked at how Coface combines Big Data with our strategic governance of data assets to upgrade human risk management expertise for customers. This article explores how credit data and information be converted into advanced decision support solutions, enabling clients to manage their commercial risks in a predictive manner.

Companies today need to go beyond simple access to data points to transform and connect relevant information to create actionable insights. At Coface, we combine our wealth of data and unique credit risk inputs using data science and artificial intelligence to provide customers with predictive risk management solutions that can help spot commercial risk and growth opportunities. 

Exclusive data + Coface expertise = unique credit insights

As a global leader in trade credit insurance for over 75 years, we know a thing or two about risk management. Beyond industry expertise, one of the most important elements is access to quality data. But what do you do with this data to transform it into something actionable?

At Coface, we build actionable insights for customers by leaning on three criteria: descriptive, predictive, and prescriptive.

• Descriptive: Financial information must provide a detailed, factual analysis of past events that has relevancy to inform a customer’s decision-making by providing a holistic view of a company's financial situation.
• Predictive: Models and algorithms are built to anticipate solvency and a company’s likelihood to default over a 12-month period.
• Prescriptive: Using our predictive data and analysis, credit recommendations give expert advice on how to best approach and minimize risk based on solvency and financial findings. At Coface, this means leveraging the in-depth analysis and expertise of our 700 risk experts.

Combining these three elements, we’ve developed products and services that transform data into something more – with a goal of providing easy-to-use solutions that help businesses make smarter risk decisions, fast.

The role of AI and data science in predictive risk management

Governing is about forecasting and effective risk management must anticipate risk before it happens. Evaluating the probability of company’s solvency – or likelihood to default on payment over the next 12 months – is one key signal, but there are many more to look out for. This might include indicators such as governing structure, late payments, or modeling the impact of possible macro-economic shocks that may have the potential to impact a company’s balance sheets. In the era of never-ending information, companies may need help evaluating quality data holistically and determining which factors should have the most weight in decision making. This expertise can help avoid bad partners, suppliers, and customers.

At Coface, we can't predict the future but we can help you to anticipate threats and limit business exposure. The Coface Data Lab team is constantly exploring new technologies and applications that may help unlock new ways of connecting data and building stronger insights in the risk management space. Combining technology with the expertise of our economists and risk experts, the team can cross-reference and analyze massive volumes of data to provide unique solutions. These include:  

• Advanced analytics solutions: Real-time comparison of financial ratios between similar companies on more than 5 million financial statements. This information can help anticipate risks and quickly identify the best investment opportunities based on scores and key indicators produced by Coface economists.
•  Scoring solutions: Estimate the probability of a company defaulting in the next twelve months to better manage debtor risk.
• Modelling solutions: Evaluate +1 year financial statements to simulate the impact of macro-economic shocks on companies based on different potential scenarios.

Using these tools, customers have access to a stronger assessment of credit risk and financial behavior. They can also access underwriting decisions to provide context from an industry expert to better understand the risk factors that stand out. With this information, your business may reduce claims, better detect early warning signals, and even increase the number of sales leads generated by seizing opportunities as they emerge.

Would you like to knowhow to transform "Big Data" into "Smart Data"? 

Find out all our experts insights about Business Information, Data and Technologies by watching our webinar replay "Smart Data and Technology for a new approach to risk management".