D&B Risk Predictor Score

The D&B Risk Predictor Score makes risks visible, allowing you to reduce bad debt and identify profitable opportunities.




Our Risk Predictor Scoring System was developed using advanced statistical modeling techniques (including logistic regression and segmentation analysis) to select and weight data elements most predictive of financial stress. The resulting models are mathematical equations that consist of a series of variables and coefficients (weights) calculated for each variable. 


In developing the models, we collected data from two time periods designated as “observation window” and “performance window”. The “observation window” defines the sample used in the model – and all data based on identification and characteristics was collected from this time period. Meanwhile, the “performance window” evaluated a combination of “good” (healthy trading) and “bad” (failed or distressed) companies over a 12-month period.  


Areas of information used in the Risk Predictor Scorecard include: 

  • Demographics – such as employee numbers, industry, business age 
  • Payment – analysis of payment experiences collected via the D&B Payment Information Exchange Program, namely DUNTRADE 
  • Financial – financial figures and ratios taken from audited annual financial statements. Factors assessed include liquidity, solvency and profitability 
  • Court – number of public court records with consideration of court types and total amounts 

The D&B Risk Predictor Scoring System adopts four scaling classifications: 

  • Risk Predictor (0.1-10) 
  • Financial Stress Score (1,001-1,890) 
  • Percentile Ranking (1-100) 
  • Risk Class segmentation (1–5) 

 

Our Risk Predictor scores empower companies to:

  • Understand a subject company's financial risk and make better credit decisions
  • Boost efficiency through automated decisions to free up and channel valuable resources into more important decision and policy making
  • Prioritize collection efforts on more risky accounts
  • Receive early alerts to possible financial distress in terms of abnormal score trends



Learn more about D&B Risk Management Solutions > 

Interpretation

Risk Predictor of 0.1 – 10.0 

This is the most commonly used scale to measure financial stress. “0.1” represents businesses with the highest probability of financial stress (likely to fail), while “10.0” represents businesses with the lowest probability of financial stress (unlikely to fail). 

 

Financial Stress Score of 1,001 – 1,890 

Customers can use this finely-graded scale to delve into the granularity of a case as part of the automated decision-making process. A lower score indicates higher probability of financial stress (likely to fail), while a higher score indicates lower probability of financial stress (unlikely to fail). 

 

Percentile of 1 – 100 

This shows how a company ranks among Hong Kong businesses in the grand scheme of the D&B database, and helps customers to grade their portfolios from highest to lowest risk of business failure. At the bottom end of the scale, “1” represents businesses with the highest probability of financial stress, while “100” represents businesses with the lowest probability of financial stress. 

 

Class of 1 – 5 

This is the simplest scale customers can use to quickly segment new and existing accounts. “1” represents businesses with the lowest probability of financial stress, while “5” represents businesses with the highest probability of financial stress.