Sector Risk Methodology | Coface Economic Research

Every quarter, Coface reviews the assessments of 13 sectors in 28 countries (representing approximately 88% of global GDP) in 6 major regions of the world. But how do we measure the risk level of these sectors? Learn more about our Sector Risk Methodology in our video.

In order to assess these risks, Coface relies on its own methodology, which is based on three pillars and eight criteria, and has been strengthened with more quantitative criteria.

The first pillar focuses on data relative to Coface’s expertise on corporate payment
behaviour worldwide, in the various sectors under consideration.

The second pillar concerns forecasts of processed financial data. The last pillar brings together key multifactorial criteria (evolution of commodity price forecasts, risks linked to structural changes that may occur in a sector and country risk assessments, which have an impact on the risk assessment of a given sector in a particular country).

The criteria included in the first two pillars are summarised below.

Coface’s expertise regarding payment experience:
• Unpaid ratio level for companies of the same sector
in a given country.
• Forecasts on changes in default amounts in a given
sector at the global level.
• Sector risk assessment from Coface’s underwriting
services.

Pillar regarding the use of corporate financial data:
• Daily Sales Outstanding (DSO).
• Analysis of quantiles of forecasts on financial data
(net debt, profitability).