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Modeling Services provides institutions with a full spectrum of solutions to develop, validate and calibrate models for clients seeking to optimize their risk rating systems.

Market Challenge: Developing an Infrastructure Tuned for Optimum Performance
Competitive and regulatory pressures - compliance with the Basel II Accord among them - are prompting financial institutions and other extenders of credit to reinvest in the tools and processes they use to rate borrowers and predict defaults and credit losses. A rating system that is portfolio-specific, validated against real-world data, and properly calibrated to a distribution of actual default probabilities can provide the foundation for a stronger portfolio, reduced credit costs and enhanced long-term competitiveness. Proper tuning and configuration of the credit process itself can lead to significant gains in bottom-line performance.

Moody's KMV Modeling Services: Customized Solutions
Moody's KMV Modeling Services delivers a customized solution that addresses each client's unique set of challenges. We offer a broad spectrum of services, from consulting on internal credit risk rating systems to model validation and calibration services to methodology and process reviews. Outcomes may range from a detailed report to a customized configurable credit risk rating system - one that integrates seamlessly with the customer's existing applications and processes while delivering accurate probabilities of default and quantifying expected losses.

Harnessing the Power of Moody's KMV Solutions
Modeling Services compares the predictive power of an organization's internal credit risk management system with those of well established credit default and Loss Given Default (LGD) benchmarks and provide expert guidance in analyzing the difference in output. Our team of professionals utilize solutions such as:
  • Agency Ratings
  • Credit Monitor®
  • CreditEdge®
  • Moody's KMV LossCalc™
  • Moody's KMV RiskCalc®

A Comprehensive Array of Services

Modeling
  • Customized credit risk scorecard
  • Out-of-time/Out-of-sample testing
  • Methodology review
  • Rating model validation and calibration
  • Benchmarking /back-testing /stress-testing
  • Model documentation for regulators
Process Optimization
  • Process review
  • Compliance review
  • Parameter optimization
Other Services
  • Loss given default (LGD) framework development
  • Exposure at Default (EAD) framework development
  • Data quality
  • Pricing curve development
Leverage Our Experience - and Your Investment in Moody's KMV Products
In developing, validating and calibrating credit models, Moody's KMV Modeling Services uses many of the tools and methodologies that are behind its industry-leading private- and public-firm credit risk systems.

Up-to-Date Regulatory Intelligence
Regulators in key financial markets around the world recognize Moody's KMV for the integrity and rigor underlying our work. We maintain regular contact with regulators, a practice that has enabled us to acquire an in-depth understanding of Basel II compliance issues, which we pass along to our clients.

Access to Clean Default Data
Many institutions' model development efforts are hampered by the limited availability of historical default data. Moody's KMV resolves this problem by (1) applying advanced data-cleaning techniques to clients' existing data and (2) augmenting clients' portfolios with public and private firm data from our databases, which are among the most extensive of their kind in the world.

An Integrated Solution
The internal rating models that Moody's KMV develops for its clients are integrated solutions that can be seamlessly implemented alongside Moody's KMV offerings such as RiskAnalyst™ and Moody's KMV Risk Advisor™.

The Modeling Services team also enjoys close collaborative relationships with researchers within both Moody's KMV and Moody's Investors Service.

Moody's KMV Implementation Services works closely with Modeling Services to implement robust, customized solutions based on Moody's KMV RiskAnalyst and/or Risk Advisor platforms, among others.