Waters Rankings 2023: Best credit risk solution provider—Moody’s Analytics

Overview

EDF-X applies Moody’s Analytics’ credit risk models to pre-score the financial resilience of more than 450 million companies globally. Even with limited or no financial data, EDF-X can generate reliable risk measures by leveraging Moody’s alternative data, driven by machine learning functionality. The firm’s proprietary data/information includes trade payment behavior data, firmographic/ownership information, and economic forecasts under stressed scenarios. EDF-X also provides customized views and targeted alerts for a range of business and credit decisions.

The solution

Customers need to identify the riskiest exposures in their portfolios in advance so that they can avoid potential losses from defaults. While risk models have existed for decades, incorporating timely inputs to derive actionable insights for public and private companies has been a challenge. EDF-X offers an accurate dataset, global coverage, and intuitive interface, helping customers determine which exposures they should worry about, and when they should act. 

Secret sauce

Moody’s Analytics’ credit risk models are built on decades of global private company data sourced from its bank consortium members, coupled with techniques to calculate credit risk from equity signals. They are validated over credit cycles and informed by the financial institutions that use them. The firm’s Early Warning System is increasingly important in uncertain economic environments as it optimizes customers’ time by identifying their riskiest exposures with forward-looking risk measurement, automated alerts, and actionable insights.

Recent milestones

• Increased coverage: Additional coverage of 50 million entities ranging from family-owned businesses to conglomerates
• Greater efficiency: Customers can upload financial statements and their own data for multiple companies via a global template to access risk assessments faster.
• Varied views of risk: Analytics such as drivers of risk assessments and sensitivity to different assumptions, dual risk rating (probability of default, market implied rating, and expected loss), climate risk impact reports, and news-based credit sentiment  

Future objectives

Moody’s Analytics will continue to invest in innovation and technology to accelerate the interoperability of its data and analytics with its solutions. For example, more data and analytics will be available in EDF-X such as climate and ESG insights, economic news, alternative signals, and alerts, so that customers can manage their portfolios with the information needed in one platform. EDF-X will expand to include instrument and security-level analysis, providing more actionable insights for its users.