"The FICO Score Economic Calibration Service supports a bank's strategic capital planning decisions and can be implemented at both a portfolio level and individual account level," said Jim Wehmann, executive vice president, Scores at FICO. "This service can help lenders easily and confidently comply with CCAR/DFAST reporting requirements."
The Economic Calibration Service incorporates Moody's Analytics projections for more than 1,800 economic variables at the national and regional level, including labor market trends, interest rates, GDP, consumer leverage and house price indexes. FICO derives an empirical relationship between the default rates observed at different score ranges and historical changes in economic conditions, to project an expected probability of default ratio under those economic conditions.
"We are excited to work with FICO to help financial institutions link macroeconomic scenarios directly to credit risk," says Cris deRitis, senior director at Moody's Analytics. "By using our advanced scenario forecasting techniques and extensive macro database, we were able to expand the Fed's scenarios and provide banks with a complete set of economic scenarios. The regional data leveraged by FICO can help banks to more accurately model and forecast potential losses from future changes in the economy."
For more information on ECS go to http://www.fico.com/en/products/fico-score-economic-calibration-service/ and for Moody's Analytics forecast scenarios visit www.economy.com/ccar.
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company's groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.
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