Dow Jones and Oliver Wyman launch predictive credit risk tool

Dow Jones has announced its new collaboration with Oliver Wyman, the global management consulting firm. Their shared initiative, Factiva Sentiment Signals, utilises data derived from news to anticipate credit downgrades, up to three months ahead of time.

The predictive solution is the first of its kind, enabling businesses to analyse global news sources and company profiles. As such, it's able to identify potential risks and prevent credit downgrades in advance.

Factiva Sentiment Signals utilises AI and natural language processing developed by Oliver Wyman, analysing global news sources within Factiva to identify signs of emerging risks such as financial distress, operational disruptions, liquidity and fraud concerns.

These indicators can become apparent in news media up to three months before significant risk events, creating a reliable early-warning system for corporate credit risk.

The sentiment signal resulting from this analysis allows organisations to monitor, anticipate and mitigate unprecedented credit events before they disrupt business operations and cause adverse financial impact.

This announcement comes after a recent study of 58 Chief Risk Officers in the Asia-Pacific region highlighted market volatility as the most significant external factor challenge when managing credit risk in the past year.

Commenting on the new service, Traci Mabrey, General Manager of Factiva at Dow Jones, emphasises the role of trusted news and journalism as powerful indicators of potential business disruptors.

She notes the daily challenge in extracting meaningful insights from the sheer volume of articles published. "We're delighted to partner with Oliver Wyman to deliver a leading-edge, AI-powered solution that can predict credit events before traditional methods to enable smarter, faster decision-making," she adds.

Explaining the key features of Factiva Sentiment Signals, Ian Shipley, Partner at Oliver Wyman, says: "We've created Factiva Sentiment Signals, together with Dow Jones, to help clients keep track of all companies they work with, every day."

Ian adds that by partnering the latest advancements in Natural Language Processing with Oliver Wyman's decades of expertise in credit risk modelling, clients are now able to identify all the relevant themes concerning companies they're interested in, thus facilitating an objective quantification of news sentiment in early warning credit scores. This new tool can be beneficial for Credit Officers, Investment Managers, Treasurers, and those working within supply chain management.

The new Factiva Sentiment Signals is accessible as a user-friendly application offering ranked daily scoring and data visualisations. These features illustrate patterns, trends and market shifts over time.

Interactive charts connect to the relevant underlying news articles in Factiva's comprehensive global collection, thereby providing unparalleled transparency and unique insight into the emerging themes in the news coverage. Signals are generated from thousands of licensed news sources and cover over 300,000 private and public companies.