A new index measuring the insolvency risk of Australian businesses is set to be launched by CreditorWatch next month.
The Business Risk Index (BRI) will produce “a dynamic measure of future insolvency risk” for 335 regions in Australia, ranking the risk in each region on a scale of 0 to 10.
“This is the first time there has ever been an index that can predict insolvency risk on a regional basis,” CreditorWatch said.
“The BRI is an invaluable early warning system for businesses, banks and other lenders, as well as governments and other public sector agencies.”
The index utilises a variety of data sources including transactional data from over one million businesses across Australia.
“The index can also measure the potential for insolvency risk at a state, street, suburb and individual business level,” CreditorWatch said.
Potential use cases for the index highlighted by CreditorWatch include businesses exploring future locations for potential expansion and lenders determining the areas that they want to increase or decrease exposure to.
Governments may also be able to use the index to help identify areas that require additional support and services.
“It’s an invaluable and one-of-a-kind measure to support the economy as a whole,” said CreditorWatch.
Results from the first Business Risk Index are set to be launched on October 13.
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
