Top-Rated Free Essay
Preview

Economics and Business Risk Information

Satisfactory Essays
476 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Economics and Business Risk Information
Rating is an interactive process relying primarily in gathering information from the issuer and supplementing it with strategic information obtained from outside independent sources. The entire process is aimed at evaluating (a) Financial Risk and (b) Business Risk Information with regard to (a) is generally provided by the company requesting for rating and, only when necessary, such information is corroborated or complemented by information from other sources. However, comprehensive information with regard to (b) is not readily available from any identifiable source. PACRA has, therefore, proceeded to develop its own database consisting of economic data by industrial sub-sectors. Additionally, it continuously monitors macroeconomic developments and important government policy changes (like fiscal adjustments) for determining their likely impact on specific sectors and companies.

PACRA does not assign unsolicited ratings. This policy is based on our sensitivity regarding the motivation for such a practice: globally, unsolicited ratings have come under criticism as they seem to be a means of pressurizing recalcitrant entities to subject themselves to rating. Again, the value of credit rating flows from the interactive nature of the exercise. Thus, unless the rated entity has an opportunity to share the reasons for any delinquent performance in the past and its view on prospects, the rating opinion may not be reliable.

The rating process begins with a careful review of an entity's published information. From this review, analysts (normally two, the lead and support analyst, are assigned to each rating assignment) determine what additional data are needed and a detailed questionnaire is sent to the client. An initial rating assessment is made and discussed internally. A discussion agenda is then prepared for a meeting with the client company's senior management. The meeting is wide-ranging, covering the company's financial position, earning trends, operating practices, competitive standing, future prospects, the economic environment and many other issues that can have a bearing on PACRA's assessment. In order to ensure full understanding of their position, companies entrust PACRA with confidential information, which is not disclosed in rating reports but which is certainly taken into account when assigning the ratings.

In determining the initial ratings for an institution, a rating proposal is prepared based on the information gathered at the Management Meeting with the company, and is presented to the rating committee (comprising the Chairman, Managing Director, senior executives and the lead analyst). A draft rating report is then prepared and sent to the client for verification of the accuracy and confidentiality of the information in the report. Upon the client's approval, the one-page summary of the report is made public and a press release of the assigned rating is issued. The detailed rating report is sent to the client.

RatingWatch: As and when any significant changes take place, the existing rating is placed on ‘RatingWatch'. The rating is then upgraded, downgraded or maintained after assessing the impact of any such change.

You May Also Find These Documents Helpful

  • Good Essays

    Risk Management

    • 622 Words
    • 3 Pages

    The Integrated Distributors Incorporated is a publically traded company that is facing many challenges. The company’s Information technology infrastructure has been ignored and many of its operating locations are running outdated hardware and software, which greatly increases the risk to the network in relations to confidentiality, integrity, and availability. Because of the outdated hardware and software, the company suffered some network compromises through their JV internet site and it led to disclosures of sensitive and strategic information.…

    • 622 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Before going away to college, decide on whether you want to take your car. If you go to school in a big city, parking might be an issue. There are expenses that are involved with maintaining a car, and due to your studies, it might not even be affordable to have one.…

    • 441 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Risk Assesments

    • 972 Words
    • 4 Pages

    Describe three procedures used to promote and maintain a healthy and safe sporting environment (P4). Explain three procedures used to promote and maintain a health and safety sporting environment (M3). Analyse three procedures used to promote and maintain a healthy and safe sporting environment.…

    • 972 Words
    • 4 Pages
    Good Essays
  • Better Essays

    Risk Management

    • 2368 Words
    • 10 Pages

    The reason of using Risk Assessment is to analyze hidden risks that could force a clash with the operation of the business of McBride Financial Services. This will analyze the plan of attack that will help to implemented for to avoid the risks and to minimize the risks that are inescapable.…

    • 2368 Words
    • 10 Pages
    Better Essays
  • Powerful Essays

    Risk Scenario

    • 4258 Words
    • 18 Pages

    The issue of risk scenario carries immense importance for most of the hospitals that are part of the healthcare setting. However, there is not only one scenario that can affect the hospitals but there are several scenarios that can create an impact on the functions of the hospital. There are three scenarios that would be highlighted in the current topic. These three scenarios have a tendency to put a hospital at risk for financial stability. The first scenario that can produce a negative impact on the hospital risk is related to patient care and safety. The second scenario is related to the physical plant. The third and last scenario is related to staffing. The role of HIM practitioner in this regard would be very important. They would serve as a clinical quality assessment resource and as a team member to perform their tasks related to healthcare work. Therefore, all the issues related to three scenarios will be discussed in detail.…

    • 4258 Words
    • 18 Pages
    Powerful Essays
  • Satisfactory Essays

    The assignment is to be submitted in both electronic and hardcopy formats as required and listed in the unit outline. Electronic format is to be emailed to Warren Gillian and the hardcopy is to be delivered to the assignment box provided on the 3rd floor of building H by due date for all students. Failure to undertake these instructions will result in your assignment not being accepted for marking or comment. This Assignment is to be carried out in accordance with the Assignment guide outlined in the course Unit Guide; failure to do so will result in loss of marks. It is to be an original work of approximately 3,000 words excluding table of contents, headings, index, footnotes, attachments and references. The assignment must demonstrate that the student has carried out extensive research and is worth 30% of your final mark. NO EXTENSIONS TO DUE DATE will be considered unless supported by medical evidence; even with this evidence the request may be declined. There will be absolutely no extensions granted for non-medical reasons. Penalties will accrue for late submission at the rate of 6 marks per day, for the first five days. Assignments received after this period will be read to provide feedback only. No assignments will be accepted for marking after this period.…

    • 483 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Homework 2 Solution, Fin 500Q, Quantitative Risk Management 1. Assume gold price risk is diversifiable, and the riskless rate is 5%. A firm produces a unit of gold a year from today. Assume all interest is compounded annually and is tax deductible. The price of gold is either $500 or $200, each with probability 0.5. Suppose the firm pays taxes at a rate of 40% for all its cash flow in excess of $300. The value of the firm is the expected discounted value of its cash flow less the expected discounted value of bankruptcy costs and taxes that it pays. The firm can hedge by buying/selling forward contracts on gold. Start by assuming that bankruptcy costs are zero. (a) Find the value of the unhedged unlevered firm. (10 points) Answer: 1 · [350 − 0.5 · 0.4 · (500 − 300)] = 295.238. Value of firm = 1.05 (b) Find the value of the hedged unlevered firm. (10 points) Answer: 1 Value of firm = · [350 − 0.4 · (350 − 300)] = 314.286. 1.05 (c) Find the value of the unhedged firm if it issues an optimally chosen quantity of safe debt. (10 points) Answer: Maximum riskless debt that the firm can issue is 200/(1.05) = 190.476. Value of firm = [ ] 1 200 · 350 − 0.4 · 0.5 · (500 − 300 − · 0.05) = 297.052. 1.05 1.05…

    • 1136 Words
    • 5 Pages
    Satisfactory Essays
  • Good Essays

    Second, establish the criteria for an ideal system. Consider the needs of the four stakeholder groups of any appraisal system: Appraisers who must evaluate performance; Appraises whose performance is being assessed; Human Resources professionals who must administer the system; and the Senior Management group that must lead the organization into the future. Further, Identifying their expectations at the start helps assure their support once the system is finally designed. Furthermore, ask each group: "What will it take for you to consider this system a smashing success?"…

    • 1319 Words
    • 6 Pages
    Good Essays
  • Better Essays

    Risk Management Questions

    • 1197 Words
    • 5 Pages

    develop a methodology for quantifying risks, or should each situation be addressed individually? Can we have both a quantitative and qualitative risk evaluation system in place at the same time?…

    • 1197 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Risk Information Sheet for Stevens Company conversion from the SQL Server database to the Oracle® Database.…

    • 726 Words
    • 3 Pages
    Good Essays
  • Better Essays

    Risk Management Trends

    • 886 Words
    • 4 Pages

    There is an adage that says ‘nothing remains the same forever” and in business this is definitely true. As times evolve and the demographics of business territories change risk management involving these trends and developments become paramount to the survivability and long-term success of both organizations and individuals. An individual need be concerned with the relevance and significance of a linear nature while an organization must take into account consideration of other stakeholders and all factors involved. Trend risk management for an organization exists at the corporate, business, and project levels. At each level stakeholders are identified and encouraged to participate in the risk management process (AL-Thani & Merna, 2005). This insures that risk mitigation of trends and developments are conducive to all involved and yields a positive outlook for future challenges that may arise. The duration of this passage will focus on new trends and developments in the risk management process as they pertain to technology, culture, and government regulation, the pros and cons of each and the implications of each to the business environment.…

    • 886 Words
    • 4 Pages
    Better Essays
  • Better Essays

    5. Whenever possible, use information that makes it possible to arrive at an informed estimate of risk.…

    • 1082 Words
    • 5 Pages
    Better Essays
  • Good Essays

    In the simulation I am the marketing manager for Thorr Motorcycles a $5 billion company, which manufactures a range of motorcycles, and produces more than 200, 000 units per years (University of Phoenix, 2012). It will be a great challenge, because I will need to formulate a differentiation strategy, also will be dealing with three different scenarios, and working closer with three demanding, and experience co-workers; Benjamin Bao (Chief executive officer), Chris Winter (Chief engineer), and Meredith Kiligore (Vice President Brand communication) who are going to help to demonstrate the relationship of differentiation and positioning.…

    • 1020 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Case1 final revised

    • 1079 Words
    • 4 Pages

    The Strengths of Kroll Bond Rating Agency are that Jules Kroll has a plenty of related experience about corporate management and that Kroll’s former company was worldwide renown, even listed in the public capital market. The Kroll corporate intelligence firm, which had shares listed on NASDAQ, and K2 Global Partners, which also performed intelligence and risk management work for clients, are evidences that Kroll may have adequate knowledge and experience about corporate management. The experience helps him extend into a credit rating business. With the strengths, the new company established could attract some people’s attention and gain users’ first trust for KBRA. Finally, those users might choose to purchase the agency’s service.…

    • 1079 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Banco Multiva Case

    • 1175 Words
    • 5 Pages

    In addition, HR Ratings revised Banco Multiva’s Credit Risk Rating from “BBB+” to “A-“, with a stable outlook for the issuance of subordinated debentures. A rating of ‘HR A’ means the issuer or offering given this rating offers reasonable certainty for the prompt payment of debt obligations and they maintain a low credit risk under adverse economic scenarios. A rating of ‘HR2’ indicates that the issuer or offering given this rating offers a reasonable ability to make prompt payment on short-term obligations and maintains a higher credit risk compared to instruments with a higher credit rating. A rating of ‘A-’ indicates an adequate rating in terms of credit quality for a fund and carries a credit risk similar to that for instruments with low credit…

    • 1175 Words
    • 5 Pages
    Good Essays