How can we be exposed to risk by initiating business connections?

Questions searching for answers:


-        There is in principle a greater risk attached to a company or person who is located in a particular region over another in another area?

-        It can be known how big this risk may be considering a comparison between the regions?

-        What level of access to finance a company may have in a region compared to another region? What about an individual access?

-        How are financially indebted entities in an area compared to other areas?

-        The affordability of the financial exposure is differentiated? It was reached a threshold of affordability? Is it different from one area to another?

-        What is the responsiveness of companies / individuals differentiated considering the regions,to the stress factors, or the accumulation of arrears?

-        The impact of exposure to currency risk is differentiated over regions? How does this impact affect the companies / individuals behavior considering the region? What about a comparison between regions?

-        Do companies / individuals have sufficient financial resources to balance financial shocks in a context of an over exposure?

-        What is the crisis behavior of companies / individuals in a region referring to consumption, investments, and savings? How this behavior may be affected at a time and what tendency may be foreseen? Their behavior is similar in all regions or is it differentiated?


Answers to these questions and other related issues are to be presented by accessing the interactive program proposed by CARF Inter Consulting.

Who should be interested (1)


l     Financial institutions


Possible interested:

-        How did / will perform credit market in a particular county. What types of loans are of interest / are accessed by the clients considering the economic environment impact, possible future trends for credits;

-        How indebted are companies / individuals in a region. The level of credit exposure relative to wage developments, differences between counties;

-        It was reached a critical threshold in accessing credit?

-        How strong are the companies registered in one region considering their access to finance, respectively the correlation with the active population and the average wage level in the county? The company’s indebtedness evolution and possible future trends;

-        How much are the banks risk exposed through loans to individuals in a region considering the risk factors associated to individuals;

-        Overdue loans , their dynamics and correlations to other related indicators  considering occupational factors and financial balances;

-        How sustainable may be the financial process? What volume of financial reserves is available at companies / individuals level in a region? What was the evolution of the report reserves versus credit exposure?  Which is the risk coverage rate? Comparative aspects between counties, and dynamic evolutions;

-        How volatile are the financial resources of companies / individuals in an area and how they evolved;

-        What is the currency risk exposure of companies / individuals in a region? Possible comparisons with other counties.  Currency risk coverage for companies / individuals registered in a county;


-        The overall funding available for a county compared to counties average or to a specific county. Possible future potential risks considering the financial exposures.

Who should be interested (2)


l     Companies

-        Developing a business plan with a higher margin of success requires a good knowledge of the factors that can influence the business;

-        Knowing the financing potential of your business partners can be relevant;

-        The business partners from a particular region can be potentially more exposed to risk factors as a result of various specific economic environment parameters;


What kind of support gives this product:

-        A calculated risk level for companies operating in the county / respectively for resident individuals;

-        A separation of risk factors in the first phase on two segments - access to finance, and financial resources available, the second segment can be split depending on their volatility  perspective;

-        Some other details regarding risk factors with influence over the companies registered in the respective county. Comparisons between relevant indicators determined for other counties are allowed;

-        Indebtedness developments including a maximum threshold calculated in an evolution approach are available;

-        Difficulties in repaying debt, levels and trends;

-        Companies / individuals propensity for consumption / investment / saving / financial reserves accumulation assessed at different time periods. Comparative evolutions to counties average, or to another county are available;

-        The system may calculate a threshold of "affordability" for companies / individuals at county level regarding their financial exposure;

-        Risk coverage ratio specific for companies / individuals in a county, the dynamic evolution and comparisons between counties;


-        Other elements / indicators used in analysis process that allow a more detailed information on the environmental developments in a particular county, elements with impact on companies businesses / on individuals.

How to read data from report


l     All indicators are usually accompanied by short explanations easily understandable;

l     In the context of percentage results these are accompanied by some explanations / interpretations used as examples to facilitate understanding..

l     To better quantify the evolutions the system may use three different expression in defining the results according to the accuracy of interpretation:

  - Risk coefficient format – an aggregate system based on five digits acting on a scale from 0 to 500, with the lower level being associated to the lowest risk;

  - percentage format – the percentage indicates the level of risk, namely compared to a maximal risk considered to be at 100%, how much is to be appreciated for the respective indicator;

  - risk rating format – rating expressed in letters format - the system uses eight classes of risk, where D is the rating that reflects the highest risk.


The three rating systems allow a good comparison over time and also for the results between counties.

Information about system evaluation / analysis


l     The system processes a large volume of data in an historical approach in order to determine correlation / impact levels. The system allows a calculation of indicators and an automatic transmission response as the one shown in these presentations;

l     The unitary system of measurement in the form of coefficients allows the use of conversions and a coherent aggregation of trends and risk factors;

l     Basically it comes that as an individual / company registered in a county / the county itself has assigned a coefficient reflecting the risk level at a given time. This approach considers an effective monitoring, and the accurate calculation offered by the coefficients is very good.

l     For details users can access breakdown over groups and subgroups of indicators, obtaining a decomposition of influence factors.

l     The weights associated to each type of indicator, in order to determine the impact in the aggregation process, was obtained after a number of tests on specific values ​​for each indicator and sub-groups and groups of indicators considering the historical data for all the counties.

l     The process uses a grid system specific to each indicator. The grids balance is tested annually based on monthly input data.

l     Given the correlation developed between indicators the grids reflect the dynamic balances.


l     Regarding the correlations it is required that the interpretation be made by associating the information given by groups of indicators, in a similar approach to the one developed to obtain the scoring and not isolated for each indicator separately .

Method of analysis / evaluation


l     Transpose of relatively large and dynamic databases considering their evolution in time for relevant indicators in the evaluation / analysis process;

l     Develop specific indicators by processing benchmark indicators from NIS, NBR;

l     Detailed analysis for establishing evolutionary connections between indicators;

l     Establish equilibrium thresholds for each indicator considering the specific evolutions for each county;

l     Generate a dynamic tracking / comparison system  based on sliding scale and balancing functions;

l     Develop a unified conversion system for the indicators and risk coefficients aim to be easily aggregated and applied  in an unique format in time;

l     Establish the equilibrium between indicators to obtain aggregated risk coefficients for individuals, companies and counties.




       The result is a simple and easy to follow how the variation of the reference indicators over time can alter risk coefficients. The system is quite sensitive to express in numerical form all influences and leave the users with enough room for maneuver for their own analyzes and interpretations based on segregation of influences.