Credit rating agencies turn to AI for help with data

Understanding complex financial numbers to assess the financial health of organizations is not an easy task.

- PRANJAL SHARMA

Solutions based on artificial intelligence (AI) are now helping rating agencies predict the future with better results.

"CareEdge Ratings has been at the forefront of integrating AI and ML (machine learning) into its credit rating processes. By leveraging AI-driven predictive analytics, CareEdge Ratings enhances its ability to assess credit risk with greater accuracy and efficiency," says Mehul Pandya, managing director and group chief executive officer of the agency.

"The agency employs advanced AI models to analyze a wide range of data sources, including financial statements, market trends, and alternative data, to provide comprehensive and reliable credit ratings." The agency says that it uses tools for natural language processing - the ability of a computer program to understand human language as it's spoken and written - to automate the extraction and analysis of financial disclosures, filings, and news articles. The capability improves the agency's ability to assess sentiment and identify potential risks, providing more accurate and timely insights about credit risk.

AI and machine learning tools can analyze a variety of information like financial statements, market trends and price fluctuations. They continuously learn and adapt.