A Flash Interview with Universal Ratings’ Chairman

MarinaBay

Q: What is Resistance to Shocks (RtS)?

A: Resistance to Shocks is the capability of a business, a portfolio or a fund, to withstand disruptive and destabilising events in the markets, in the economy and in the geopolitical scenario.

Q: How many RtS rating classes are there?

A: Conventional ratings have between 20 to 30 classes. RtS ratings are stratified into five classes, indicated by 1 to 5 stars.

Q: How is an RtS rating measured?

A: RtS ratings are measured on a scale ranging from 0% to 100% Values below 50% generally reflect situations to be avoided.

Q: Why is Resistance to Shocks important?

A: Because sustainable businesses and investments are those that can best absorb the turbulence and instabilities of the markets and of the global economy.

Q: Is a Probability of Default (PoD) rating still relevant?

A: Even though PoD ratings are still the standard, their relevance is questionable because of the highly unstable nature of the markets and of the global geopolitical scenario.

Q: Why is an RtS rating and objective rating?

A: Because there are no humans in the loop. The system is fully automatic and cannot be manipulated. Our ratings are science, not opinions.

Q: What can be rated using RtS ratings?

A: Companies (public and private), stocks, ETFs, futures, bonds, options, portfolios, funds, funds of funds, markets, national economies and systems of all of the above.

Q: Is an RtS rating comparable to conventional ratings?

A: No. RtS ratings provide new information with respect to a PoD rating. RtS ratings, unlike conventional ratings, have been engineered specifically for a turbulent and volatile economy.

Q: Why are RtS ratings free of conflict of interest?

A: For two reasons. First, Universal Ratings is an independent and privately owned company. Second, the algorithm powering RtS ratings cannot be manipulated.

Q: How does one obtain an RtS rating?

A: It is sufficient to submit data (fundamentals, portfolio or fund performance) to our automatic B2B rating platform. Results are generated in near real-time and sent back to the client immediately.

Q: How frequently can an RtS rating be computed?

A: When rating listed companies, RtS rating is performed on a quarterly basis. Portfolios, funds or other financial products can be rated as frequently as desired, even on a daily basis.

Q: Which data sources are used to compute RtS ratings?

A: Universal Ratings can deliver ratings based on data from Bloomberg, Thomson Reuters or any other data source. Clients may also use proprietary data.

Q: Does Universal Ratings store clients’ ratings?

A: No. Nothing is stored, neither the input data nor the corresponding RtS ratings.

Q: What if a client wishes to rate sensitive data?

A: The RtS rating engine does not need to know what each parameter in the client’s data represents. Data can also be scaled before it is submitted for processing.

Q: What is the main difference between RtS and PoD?

A: A Probability of Default is deprived of any physical meaning. A Resistance to Shocks, on the other hand, is a physical property which may be measured.

Q: How is the RtS rating system priced?

A: Annual flat fee.

Q: Where can I read more about RtS ratings?

A: In my last book: “Complexity and Resilience Rating: New Paradigms in Finance, Economics and Sustainable Investment”

 

Complexity and Resilience Rating: New Paradigms in Finance, Economics and Sustainable Investment by [Jacek Marczyk]

 

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