OTS - AI Reads Newspapers and Monitors Credit Risk
2019. May 09. 13:20
Munich, 9 May, 2019 (APA/OTS) - With the new release of its early
warning system Risk Guard RSU is becoming one of the first
financial service providers in Germany to use machine learning in
an operational risk management system. Complementing existing
models, new algorithms enable the system to analyse reports from
nearly 300 newspapers and journals for information about changes in
creditworthiness of German companies.
"The model was developed using the Supervised Machine Learning
approach", says Carsten Demski, head of team in RSU's methodology
department and in charge of the project. "Based on a dataset
comprising more than 3 million news reports on some 3,000 companies
we've been able to develop a stable and accurate credit risk model.
Note that 80% of these companies are unlisted."
The new system component automatically analyses very large
amounts of news information every day and flags critical messages.
Analysts can then read these messages directly in Risk Guard.
"Risk Guard enables our customers to monitor borrowers
continuously and react to signs of financial weakness. Our system
is optimised for detecting such risks up to one year in advance",
explains Dana Wengrzik, Managing Director of RSU Rating Service
Unit GmbH & Co. KG. "We developed Risk Guard after many banks had
been caught off-guard by the 2008 financial crisis."
RSU has been operating Risk Guard since 2011. The system
currently monitors risk parameters of some 3,100 exchange-listed
companies and banks with which RSU's customers do business.
"Although our clients are very satisfied with Risk Guard, it
didn't cover unlisted companies in the past" says Demski. "Also, we
wanted to find a way of analysing news reports automatically
because they simply are an important source of information in
credit risk management."
Risk Guard now picks up signs of elevated credit risk for both
listed and unlisted companies, which saves analysts a great deal of
time and work.
With a long economic upturn apparently drawing to a close,
banks and institutional investors are well advised to attach
increasing importance to risk detection. "Many banks are testing
intelligent solutions for processing business news", says Dana
Wengrzik. "But it takes top-level expertise to develop and
implement a fully operational system. Which is why we are proud to
be one step ahead of even the big players in the market."
Contact:
RSU Rating Service Unit GmbH & Co. KG
Frau Sabine Köhl
80333 München
Sabine.koehl@rsu-rating.de
Phone: +49-89-442340-148
www.rsu-rating.com
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