AI Reads Newspapers and Monitors Credit Risk

Munich (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

Original-Content von: RSU Rating Service GmbH & Co. KG, übermittelt durch news aktuell