Risk solutions provider Inoxico has confirmed that it has identified a meaningful correlation between its proprietary Inoxico Director Singularity Index (DSI) and an organisation’s likelihood of a defaulting on its financial obligations.
According to Inoxico CEO André Stürmer, Inoxico has proven a statistically significant relationship between high Inoxico DSI scores and dubious credit ratings in a breakthrough announcement that marks yet another first to market for the risk mitigation specialists.
Originally launched as a governance tool, the Inoxico DSI measures the potential risk posed through a company’s director associations and relationships. Inoxico reveals that this particular score is a key indicator in evaluating credit risk, as according to Stürmer.
“Our findings show that the more directors on a company board and the more diluted their focus is through serving on other boards, the more likely that particular company is to default on its financial obligations.”
These findings are no less than what the company has been expecting.
“Credit bureaus routinely use profiling and scorecards as a means of establishing risk and information is an integral part of the scoring process.
“Intelligence around how long an organisation has been in business, how often it may have been audited, its historical payment behaviour – these variables and others contribute statistically to the probability of an organisation honouring its credit obligations,” says Stürmer.
“As the Inoxico DSI measures the number of total directorships held by the directors on the board of a specific organisation, more specifically providing a scale of the singularity of focus of directors, it should come as no surprise that there should be some kind of correlation between director singularity and a company’s commitment to financial sustainability.
“This is particularly relevant as directors are considered to be the drivers and custodians of ethical business practices,” he adds.
In the same way that relationships between directors on the same boards are not necessarily a sign of non-compliance or fraud, a high Inoxico DSI score does not necessarily mean a certainty of default. However, it will become a valuable contributor towards assessing potential risk, and one that that is unique to Inoxico’s offerings.
The company already has a reputation for superior data sets and an ability to innovate how it beneficiates its data. The inclusion of the exclusive Inoxico DSI scores into its market-leading solutions looks set to add critical value to its customers, while widening the gap between Inoxico and its competitors.