I monitor a company and I see an alert saying “Risk of Business Failure” or “Implied Credit Ratings Change”. What do these mean?

 In some jurisdictions, for example Canada, among the data points one can find about a company are different risk scores or credit scores etc.

In the above example, “Risk of Business Failure” refers to Equifax’s Business Failure Risk Score (BFRS), and “Implied Credit Ratings Change” refers to Equifax’s Commercial Delinquency Score (CDS).

The BFRS represents probability of a company experiencing failure over a period of 12 months (a business is considered to have failed if it legally becomes bankrupt or is in assignment or receivership with unpaid debt, or ceases to operate without paying its creditors even if no legal notice is issued). The BFRS assigns a scale of risk from 1001 to 1650, where a 1001 represents businesses that have the highest probability of failure, and 1650 represents businesses with the lowest probability of failure.

For more on the BFRS, please see https://www.equifax.ca/business/product/business-failure-risk-score/.

Similarly, the CDS aims to predict the likelihood of a company not paying its non-financial trade accounts in a timely manner in the next 12 months period, and assigns a scale of risk from 101 to 600, where 101 represents businesses that have the

highest probability of severe delinquency, and 600 represents businesses with the lowest probability of severe delinquency.

For more on the CDS, please see https://www.equifax.ca/business/product/commercial-delinquency-score