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TRaiCE Early Warning Risk Index – A holistic assessment of business health

At TRaiCE, our goal is to help commercial lenders manage credit risks more efficiently. To that end, one of our unique offerings is the Early Warning Risk (EWR) Index. Our proprietary risk index is designed to give lenders a holistic assessment of their borrower’s business health using all the data points available on that business. Here’s why and how we do that.

A laptop screen that shows a risk gauge denoting the TRaiCE EWR Ibdex
The TRaiCE EWR designed to give lenders a holistic assessment of their borrower’s business health

Why the TRaiCE EWR exists

In the current volatile economic environment where commercial delinquencies are on the rise, it is vital that financial institutions stay ahead of portfolio risks. For this, everything from a company’s past health to its current situation and future creditworthiness needs to be assessed in an ongoing manner. Such granular, real-time, holistic risk assessments may be doable for a few entities. But if you have a portfolio of thousands of public and private companies, it becomes a herculean undertaking, one that even a large risk management team would struggle to accomplish.

That’s why we designed the TRaiCE Early Warning Risk Index. Leveraging proprietary ML and NLP algorithms, our EWR assesses an entity’s business health daily based on all available financial, non-financial, and alternate data. More importantly, it can do this for every business in your portfolio every day, no matter the portfolio’s size, composition, or complexity.

What goes in and what you get

The TRaiCE EWR uses powerful Large LLM and supervised ML models to aggregate data from varied sources. This includes structured financial information from periodic financial statements, internal accounting spreadsheets, credit bureau reports, Basil-III metrics, and government databases. It identifies key financial ratios in the structured data and combines it with pertinent unstructured non-financial risk data found in economic forecasts, news reports, social media, review platforms, and other online forums (Side note: TRaiCE has a Digital Risk Index that assesses a company’s business health based on unstructured digital data. You can find more information on that here).

In other words, the TRaiCE EWR measures financial metrics and combines them with non-financial metrics to give you a holistic risk score that takes into account all the factors that go into making a successful business today. These business health scores are computed daily for your entire portfolio and rank ordered according to risk alert levels for easy surveillance. In addition, using logistic regression models that analyze leading and lagging indicator data, our EWR also gives quarterly risk projections, business red-flag trends, stock-price comparisons, and much more.

A laptop that shows the TRaiCE EWR index with separate funnels with financial and nonfinancial data going into the index
The TRaiCE EWR produces risk scores that take into account both financial & nonfinancial parameters

With the TRaiCE EWR, you get a one-stop portal that assesses current and future credit risks on a daily basis and issues early warning alerts on high-risk entities. More importantly, you get all this without having to spend countless hours chasing down relevant data from myriad sources, analyzing them separately, and then combining the results. This way you can focus on what really matters – portfolio growth and profitability.

Want to know more? Schedule a demo to see the TRaiCE EWR in action or try it out with a free trial today!

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