how does the risk score work for limited companies?
The risk score is based on an unique model which has been developed with Scorex (UK) Ltd, which assesses the probability of a particular company becoming insolvent based upon it’s financial details and history.

The risk score lets you compare the risk associated with a particular company against the background rate of insolvency.

For example, approximately 2% of the trading population become insolvent over the course of a year.

If the risk score of a particular company is 10 or less, we have found that they have a 50% chance of becoming insolvent, which is 25 times the background rate. This shows that the company is a high risk as it is 25 times more likely to fail than the average company.

If the risk score of a particular company is 80 or over, we have found that they have a 99.75% chance of surviving. The probability of them becoming insolvent is only 0.25%, which is a tenth of the background rate. This shows that the company is ten times LESS likely to fail than the average company and so is a low risk.

These calculations can only give an indication of the likelihood of an event occurring and cannot accurately predict what will happen. However, they are very useful when considering the risks of involvement with a particular company.

how does the U score work?
Because the risk of a non-limited company becoming bankrupt is higher than that of a limited company, they use a slightly different model to work our the level of risk. The background rate of insolvency for non-limited companies is 5.3%, and U scores are calculated by slightly different financial criteria than risk scores for limited companies.

The U score works along the same basic principles as the risk score, in that the score is between 1 and 100, with the lower scores indicating the highest risk and the highest scores indicating the lowest risk.

why do we need risk scores?
Risk scores help you work out the likelihood of a company becoming insolvent or bankrupt over the course of the next year. This helps you in a number of different scenarios, such as if you are trying to calculate what level of credit to extend to a company.

Risk scores help you protect your own company by knowing the level of risk associated with doing business with another. It makes you aware of the probability of that company becoming insolvent or bankrupt, and allows you to take appropriate measures to ensure that your company remains safe.

which reports include risk scores?
Reports that include risk scores are

• Express report
• Financial report
• Business report
• Insight Plus (non-limited companies)