Understanding Peer Benchmarking and Business Risk Ratio

September 3, 2018

By Sanday Chongo Kabange, The Red Flag Group®

When conducting due diligence background checks on your business partners, do you go a step further to check how they are performing when you compare them with others operating in the same industry and country? Would knowing their performance give you a better assurance that you are dealing with the best and most reliable partner?

To help answer these questions, we have included this free service as part of our standard delivery of data and business intelligence for your due diligence obligations.

Our IntegraCheck® | Integrity Due Diligence reports now include Peer Benchmarking, to give you the best possibility of a benchmarking standard that exists in the market.

Peer Benchmarking is incorporated in the seventh generation of our IntegraCheck® | Integrity Due Diligence product (IntegraCheck®7.0); to provide context in how your third parties and business partners are performing in markets and countries where they do business for you. This way, you will be able to make better business decisions by deciding whether to continue dealing with an underperforming partner or engage a higher performer.

Peer Benchmarking methodology

The Red Flag Group®’s Peer Benchmarking information is based on aggregated data obtained from conducting over 500,000 investigations across various industries and countries, and is kept up-to-date with our unique algorithm using the latest available data. The key elements used to compare an entity and its peers are:

  • Integrity Profile
  • Management Profile
  • Corporate Profile
  • Reputation Profile
  • Operations Profile
  • Financial Profile

Each element is graded out of 10, with 10 being the “top of class” rating, based on the subject matter and country expertise of our compliance and risk specialists located in 15 different countries and covering 45 languages.

To ensure clarity when making comparisons, a radar chart is provided as a visual display of how the subject entity’s key business elements compare with its peers, based on our findings.

Peer Benchmarking

Business Risk Ratio

The Business Risk Ratio is derived from the Peer Benchmarking data and involves analysis of all facets of the business. This ratio is used to provide an indication of how the entity’s overall business performs, in comparison to its peers.

Our approach to risk analysis is aimed at drawing your attention to, and bringing understanding of, all relevant risk factors and viewpoints we have identified. As such, this ratio may change over time, and should be revisited on a regular basis.

Core analysis

The Business Risk Ratio is based on the comprehensive analysis of the data we uncover by experienced, multidisciplinary, lawyers, accountants, auditors, as well as compliance and fraud experts. It is calculated using the Peer Benchmarking scores (specific to the country and the relevant industry) and the current scores of an entity. 

Understanding the scoring

  • On Par -The entity performs on par with its peers, with common and manageable business risks associated
  • Low/ Underperforming - The entity underperforms against its peers, with clear business risks associated
  • High/ Outperforming - The entity performs better than its peers, with minor business risks associated

Specific analysis

The Business Risk Ratio reflects the different aspects of doing business in different industries and countries, and our risk management specialists and advisors will consider specific risk factors such as:

  • Client Concerns (where provided)
  • Industry Sector
  • The legal and regulatory framework for that country
  • Local business culture
  • Political and economic environment

Learn more about IntegraRating® and enjoy key benefits of a tailored risk rating system that conforms to your risk tolerance. Request a sample report here.

 

Related Articles:

Introducing IntegraCheck® 7.0 - A comprehensive 360 business overview

IntegraCheck® 7.0 – Enhancing Risk Analysis and Risk Assessment

Understanding IntegraRating®

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