The Industry Risk Score (IRS) is CRISIL’s multi-factor assessment model capturing the influence of industry variables on the credit profile and debt repayment ability of companies in a specific industry over a 3-4 year horizon. The risk score is arrived at by aggregating the scores assigned to relevant parameters such as demand-supply outlook, input risk, competition, and financial performance. These parameters take into account financial performance over the past five years to evaluate structural profitability in the sectors. They also factor in a forward-looking perspective on expected trends in demand growth, capacity addition, competition, input cost expectations, and utilisation levels along with the impact of government regulations and policies.
We update the scores of about 209 industries on a six-monthly basis. These scores are provided to financial institutions such as banks and non-banking financial companies as critical inputs for their credit and risk assessment models. The scores also help our clients:
- Identify 'positive and negative' industries and monitor industries on a comparative scale
- Take more informed strategic decisions by focusing on industries that are likely to perform well and reduce exposure in below investment-grade industries
- Assess borrower risk through an accurate assessment of industry risk
- Monitor changes in the risk profile of a sector
- Monitor industries proactively and on a continuous basis
