Så fungerar riskklassificeringsmodellen
FCG Risk & Compliance AB has, on behalf of Tessin, developed a risk rating model to give investors an idea of the individual project and its risk profile in comparison to other projects marketed on the platform.
About the risk classification model
Risk classification models is a collective name for different types of methods aimed at providing a combined assessment of an expected future outcome. These models serve as a tool to facilitate consistent assessments, because underlying information is always valued in the same way. However, a risk classification model's assessment is never an actual fact, but rather a comprehensive risk indication and an aid to support a decision. A project with a good risk classification can end up in default and a poorer risk classification doesn't necessarily mean that a project will fail.
The model is based on reference projects from Tessin and thus does not take into account other investment options that the investor can do outside of Tessin's platform. Therefore, the risk scale does not compare with other investment alternatives.
Method and Risk scale
The choice of risk classification method depends on a variety of factors such as access to historical data and historical default. Due to the lack of relevant historical data, this model has been created to be an "expert model". An expert model is based on experts' judgements and experts' experiences from previously completed projects
The risk scale is presented as four letters, where A refers to the lowest risk and C as the highest. Risk class D represents the projects that are not currently available for investment and are given direct discounts. Causes of direct rejection may be fraudulent/other serious financial crimes committed by the board member or lack of internal management in connection with Tessin's previous capital gains.
Risk scale
The value of a project on the risk scale is determined by the risk rating model generating a score between 1 to 100, which is then counted switched to a risk class (A-C). Riskclassification-model consists of the majority of factors and is prioritised in the following order:
Underlying Security
Counterpart
Project stage
Investment duration
Underlying security is given the highest weight in the Model (list above), which indicates that it is assumed to be the highest risk driver. Each risk factor consists of one or more variables that are aggregated and weighted together to get a sub-score per risk factor.
Scoring value = 0.45 * Underlying security + 0.25 * Counterparty + 0.15 * Capital structure + 0.10 * Project stage + 0.05 * Investment Duration * 100
The score of a project is calculated by the formula above which contains the risk factors selected and the weight of the respective risk factor. The risk factors that are considered to have the greatest impact on the risk thus receive a higher weight in the model.
Risk class A: Scoring value 71-100
Risk class B: Scoring value 66-70
Risk class C: Scoring value below 66
Download an in-depth description of the risk rating model.
Use and reliance on the risk classification model is entirely at your own risk. The investor should always form their own perception of the risks in the individual project. The risk classification model is entirely comparative and is not intended to reflect the individual project's risk level in absolute terms. Risk classification does not claim to weigh in all relevant circumstances or correct weighted risk factors. Neither FCG Risk & Compliance AB or Tessin Nordic AB assumes any liability for direct or indirect costs, losses or loss of profits directly or indirectly attributable to (a) the investor relied on the risk rating model and/or (b) the investment in one or more projects.