Rapid Ratings Blog

Brexit Spurs Risk Reassessment: 5 Factors to Consider When Evaluating UK Companies

Posted by Rapid Ratings on July 07, 2016

EUBrxt.pngIn the wake of the UK’s shocking decision to leave the EU, markets across the globe face unforeseen turmoil whose severity and duration fall beyond anyone’s predictive capability. As details surrounding Brexit begin to unfold, more questions arise than answers. However, one thing is clear – companies will need to begin recalculating both commercial and investment risks.  First and foremost, it’s important for businesses to have a clear understanding of which third-parties, suppliers, counterparties or investments have UK exposure.  Businesses will then need to evaluate which of the exposed companies will begin the new Brexit Era in robust financial health, allowing them to withstand the volatility and challenges, and which ones fall shortest at the starting gate.

Five factors to consider when recalculating risk exposure of UK companies

  1. Understand the financial and operating efficiency of UK-based companies with our Core Health Score (CHS)

  2. Evaluate near-term default risk of UK-based companies that may be affected most by market volatility with our financial health rating 

  3. Track aggregate trends in the financial health momentum of British companies with our Country Report

  4. Find outliers by looking at the FHR® of the highest and lowest-rated companies in the UK

  5. Gain visibility into the financial health of privately-held companies you do business with in the UK

Financial Health of British Companies by Industry

Rapid Ratings’ assessments of financial and operating efficiency (the Core Health Score -- CHS) and near-term default risk (the financial health rating) are the most timely, consistent, and reliable metrics available to risk managers and procurement professionals as they address their new vulnerabilities. Since all of us are unsure of what the future holds with politics, trade deals, and future policies, understanding the financial health of individual companies, industries, or the entire British universe provides an indicator of its viability in the medium and long term. Looking at the breakdown of the average FHR® by industry allows us evaluate the entire British universe as a whole, and see which industries may be stronger or weaker at the start of the uncertainty.  Click to view the full graph.

Brexit_Graph_-_Sample.png

In addition, a deeper analysis into a country’s trend analysis, health momentum distribution, and risk category distribution enhances your ability to make better business decisions for investments in that region. In-depth analysis of the UK in our Country report is updated monthly so current events are taken into account without the volatility the market shows.  Download a free copy of our full United Kingdom Country Report.

While the recent referendum results on Brexit have raised incredible amounts of uncertainty and anxiety about the future, this is not a time to panic. Over the next few months as more decisions are made and more information becomes available, we will provide further strategies on managing your risks.

Topics: Supplier Risk Management, Credit Risk Management, Third-Party Risk Management, Risk Assessment, Market Events