modefinance and Bureau van Dijk present the Market Reactive MORE score
Today, we are excited to announce that the Market Reactive MORE score has been released.
The Covid-19 pandemic, and the consequent economic crisis we are living in, are certainly not easy, not even simple from a financial and entrepreneurial point of view. Credit risk assessment and management have grown up, rising their essentiality to all the stakeholders in the business world. In certain situations, it is necessary to understand not only a company’s resilience, but also the impact of the event affecting market conditions.
We have worked together with our partner Bureau van Dijk, and Moody’s Analytics economists, to develop and deliver this Reactive score. We re-imagined an intuitive yet performative score, applying the advanced and dynamic ForSt model, adapted to be sensitive to the macroeconomic and socioeconomic global changes, with the aim of making the new score the most accurate as possible.
Original MORE score vs Market Reactive MORE score
A quick chat with modefinance CEO Valentino Pediroda and Bureau van Dijk risk solutions director Ryan Macromalli
About the MORE score: what are its highlights and distinctive features?
Valentino Pediroda: "The original MORE score is primarily a financial-statement analysis, which already assesses the credit risk with a 18 months’ time horizon. It is based on the historical and public data of the companies, without unexpected changes (either positive and negative) of the economic and financial environment where the company operates. In case of sudden shocks, the MORE score allows to understand the resilience of the company, where companies with higher scores have greater ability to absorb the impact, while companies with lower scores are more subject to problems. MORE is the core of modefinance services since 2009, and is part of our official credit rating methodology, tested and validated on a regular basis".
The Covid-19 pandemic have had a sudden impact on companies' health. How will this affect credit risk assessment models ?
Ryan Macromalli: “The ongoing partnership with modefinance led us to promptly develop this Market Reactive score’s model, which leverages economic and forecast expertise, providing a more predictive view of a company’s creditworthiness, taking into account the sector, region and economic environment that a company operates in.
In particular situations, it is necessary to understand not only the resilience of the company but also how it will be affected by macroeconomic changes and subsequent crisis.”
When being asked which score is better for a daily use, Ryan says “both types of score have their merits. They are just different, supporting companies to deal with risk management and evaluations effectively.”
Market Reactive MORE score features
Based on the original MORE model, and companies’ most recent financials, the Market Reactive MORE score forecasts financials based on certain “impact scenarios”, taking into account specific sector and country risk factors, and reflecting current creditworthiness. The key variable is the expected variation in a company’s turnover. The Market Reactive model aggregates the different elements to quantify the expected turnover and assign the corresponding Reactive MORE score to a company. Impact scenarios are regularly reviewed, so the score offered is more sensitive to market conditions: the Reactive score would reflect the changing impact of the coronavirus pandemic on companies and countries, as well as other factors or events that may affect market conditions in the future. The Market Reactive MORE score is designed to give Catalyst and Orbis users a timely snapshot of financial strength to allow better, faster decision making at this time of ongoing change.