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Stratification: the power of layered risk analysis

Many originators currently take days to understand the risks associated with your transactions. This is due to their reliance on manual processes for analyzing asset data. These manual processes involve pulling information from internal management systems, classifying each asset or transaction individually, and then running calculations to assess risk. This time-consuming and tedious approach limits investors’ ability to make quick and informed decisions. Our new stratification tool grants swift access to risk intelligence, empowering faster and more informed investment decisions.

What’s in it for you?

  • Interactive reporting: Enhance reporting automation through the development of custom reports leveraging granular stratification tables.
  • Transparency: Reinforce confidence in reported data through our unbiased, comprehensive analysis and data processing expertise.
  • Risk management: Empower Investors with actionable transaction intelligence, enhanced security protocols, and leverage risk management technology.
  • Smart stratification: Granular time series analysis that captures historical data, enabling performance evaluation at both the transaction and asset levels.

Utilizing the stratification tool, one can compare transactions and their performance with other transactions, identify trends, and concentrate exposure on less risky and more profitable opportunities. Additionally, one can optimize reporting workflows through comprehensive automation. Centralized data resources, calculations, and reports ensure seamless team collaboration and consistent access to critical resources for all stakeholders and business partners. Furthermore, leverage Cardo AI technology to bolster security by facilitating report sharing through a secure platform, eliminating reliance on potentially vulnerable email attachments.

Why does it matter?

  • Effortless data preparation: Our built-in reporting tools streamline data preparation workflows, enabling you to focus on analysis and decision-making.
  • Granular risk assessment: Effortlessly generate multi-risk layer stratification reports using any asset data field. Gain a deep understanding of transaction-level risk profiles.
  • Improved investment strategies – Identify assets that align with your investment objectives through historical portfolio analysis. Compare performance and trends across different transactions to make adjustments and optimize portfolio performance.

How does it work?

  • Intuitive interface: Cardo AI’s stratification tool features a unified user interface, enabling users to seamlessly interact with data. Construct custom, multi-risk layer stratifications tables, as well as time series analyses with ease.
  • Comprehensive data analysis: Effortlessly collect and standardize asset-level data across diverse dimensions, including geography, sector, borrower rating, maturity, and other relevant metrics. Aggregate this data by dynamically constructing stratifications that analyze single or multiple transactions across various risk factors.
  • Risk minimization strategies: Leverage the insights derived from multi-risk layer stratification to identify and mitigate potential risks associated with your transactions. Cardo AI empowers you to optimize transaction management by making informed decisions based on comprehensive risk profiles.

Use case 1

Our client is a digital lending platform originating SME loans, financing its activity with multiple asset-based transactions (warehouse financing, ABS and credit line) for which it has to report to investors and lenders. Prior to implementing Cardo AI’s platform, the originator required up to three working days to process each transaction’s loan tape and generate reports for each transaction and investors. This process involved extracting relevant data from its own loan management system, classifying each loan based on different contractual definitions, checks limits and triggers, slice & dice the portfolio to calculate concentrations and statistics.

Our platform transformed its operations by delivering real-time, comprehensive insights. The originator can now stratify and conduct in-depth risk analyses across various dimensions (e.g., sector, performance status, maturity, outstanding balance, days past due) at any time, leveraging on transaction specific metrics, ready to be used KPIs, and the most current data available.

Image 1: Time Series Analysis for different groups and filtered by Economy Sector

Results:

  • Time efficiency: Drastically reduced the time required for data processing and risk analysis from days to hours.
  • Error reduction: Minimized data errors, leading to more reliable and effective decision-making.
  • Improved investor communication: Streamlined the reporting process, allowing for timely and accurate updates to investors.

Image 2: In depth group analysis provided part of the stratification tool functionalities

Use case 2

A global investment firm, which has invested in over 15 transactions in the US primarily focused on Consumer Loans and Auto Loans, struggled with operational inefficiencies in analyzing data across multiple portfolios. Internal report generation often took 4-5 working days and frequently contained data errors, hindering effective decision-making.

With our advanced data stratification capabilities, the investor can now aggregate and stratify data as needed, modify the reporting at will and thus allowing for a more detailed and digestible analysis of specific fields, such as increase in days past due, dropping borrower ratings, indicate interest rate trends, or highlighting the increase in charge-offs.

Image 3: Graph showing the average days in delay by FICO score

Results:

  • Portfolio structuring: Enabled better portfolio structuring by focusing on the most profitable and least risky sectors without compromising returns.
  • Insightful analysis: Enhanced the ability to dive deeper into data relationships, providing clearer insights and better investment strategies through real-time, in-depth analysis.
  • Operational efficiency: Significantly reduced the time required to generate accurate reports.


Interested in getting the best out of our advanced stratification tool? Request a demo here to see the new platform functionalities in action.