(You require “Datamaran for Executive” to use this function)
See below for more details about the methodology used to calculate the metrics displayed in the ‘Summary’ tab:
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Likelihood.
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Impact.
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Velocity.
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Public Risk Disclosure.
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Overall Benchmark Disclosure.
Before exploring the details of these metrics, read about the ‘level of emphasis’ below.
The ‘level of emphasis’ is a proprietary score calculated to determine the importance a company places on a certain topic in its disclosure.
Using NLP, Datamaran’s engine analyzes a set of different criteria (volume, relevance and diversity) for each topic and each company’s report (published within the last three years) and calculate a score from 0 to 3:
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0 = No mention;
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1 = Low emphasis;
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2 = Medium emphasis;
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3 = High emphasis.
Each risk’s score is an average of its underlying topics’ level of emphasis, which is further transformed to obtain a percentile rank score between 0 and 1.
The ‘level of emphasis’ is used in the following metrics:
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Likelihood: to determine the corporate reports score;
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Impact: to determine the impact score itself;
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Overall Benchmark Disclosure: to determine the underlying score used to build the three-level scale.
Likelihood
The likelihood is a score relative to all analyzed risks, calculated according to the prevalence of the risk across all analyzed sources.For that, each risk is assigned a score from each source.
The score for each risk is an average of the topics’ score calculated and aggregated at the source level:
- For corporate reports: the score is based on the average ‘level of emphasis’ for that risk across all reports included in the analysis, based on the industry(-ies) and peers/companies selected during the set up.
- For hard laws: the score is based on the total volume of regulations applicable to that risk across all industry(-ies) and countries of operations selected during the set up. Regional applicable hard laws based on selected countries are also included.
- For soft laws: the score is based on the total volume of initiatives applicable to that risk across all industry(-ies) and countries of operations selected during the set up. Regional and global applicable soft laws based on selected countries are also included.
- For online news: the score is based on the total volume of news articles applicable to that risk and mentioning at least one company belonging to the industry(-ies) selected during the set up.
Those four scores, for each source and risk, are transformed into a percentile rank and averaged to determine the likelihood score.
Likelihood is evaluated on a two-level scale:
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High: the underlying score is equal to or above 0.5 (out of 1).
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Low: the underlying score is below 0.5 (out of 1).
Raw data at the risk level can be obtained from the ‘Analysis’ Export folder. This can be downloaded from the ‘Overview’ page to obtain the level of emphasis for each underlying topic (‘Disclosure Benchmark’ file) and the likelihood score for each risk (“Risk Analysis” file).
Impact
Indicates the anticipated impact to your company, calculated by the emphasis placed on related disclosures in your most recent annual sustainability and financial reports.
Your latest annual disclosure (including all available 10-K, annual financial report and annual sustainability report) is screened through the lens of all the relevant topics for your industry(-ies).
The level of emphasis of all topics are aggregated and averaged into the relevant risks according to the mapping of your industry(-ies).
The risks’ scores are transformed into a percentile rank to facilitate prioritization.
Impact is evaluated on a two-level scale:
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High: level of emphasis equal or above 0.5 (out of 1);
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Low: level of emphasis below 0.5 (out of 1) - note that this also includes risks that would have a 0 as level of emphasis (if all underlying topics are not mentioned).
Raw data can be obtained from the ‘Analysis’ Export folder (‘Disclosure Benchmark’ file) downloaded from the ‘Overview’ page to obtain the Impact score for each risk.
Velocity
Indicates the direction of change in the likelihood score over the past three months.
Velocity is evaluated on a three-level scale:
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‘Positive’: the likelihood score for the risk has increased by 2 or more ‘ranks’ over the past three months;
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‘Neutral’: the likelihood score for the risk has remained the same or showed limited change (+/- 1 rank) over the past three months; and
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‘Negative’: the likelihood score for the risk has decreased by 2 or more ‘ranks’ over the past three months.
The automatic analysis of historical data replicates the same parameters selected in your analysis. This is to determine the changes in its evolution.
Note that because the velocity is based on the likelihood score ranking, which is a relative metric, some risks may fluctuate as others fluctuate. This may not necessarily be because of increased or decreased activity across sources specifically related to that risk.
Raw data at the risk level can be obtained from the ‘Analysis’ Export folder (“Risk Analysis” file). This can be downloaded from the ‘Overview’ page to obtain the velocity score for each risk.
Public Risk Disclosure
Indicates whether the risk is identified in the risk factors section (or equivalent) of your most recent 10-K or Annual Report back to three years)
The ‘level of emphasis’ is not used in this calculation but takes into account the mention of a topic included (or not) in an applicable risk. This accounts for the relatively content that comprises the 10-K Risk Factor or Annual Report’s risk sections.
Note that this metric differs from the ‘Overall Benchmark Disclosure’ in the scope of the analysis performed. While the “Overall Benchmark Disclosure’ metric analyzes all reports and content, the ‘Public Risk Disclosure’ metric focuses only on risk factors in the 10-K or Annual Report risk section.
Because of these two elements (‘level of emphasis’ not used and scope of analysis), it should be expected that some risks may have their “Public Risk Disclosure’ metric evaluated as ‘No’, while also having their ‘Impact’ metric’ as ‘High’, or their ‘Overall Disclosure Benchmark’ as ‘Middle’ or ‘Leading’.
Public Risk Disclosureis evaluated on a three-level scale:
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‘No’:no coverage of any underlying topics;
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‘Partial’:at least one underlying topic not covered; and
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‘Full’: all underlying topics covered.
Raw data at the risk level can be obtained from the ‘Analysis’ Export folder (“Risk Analysis” file). This can be downloaded from the ‘Overview’ page to obtain the risk coverage for each underlying topic.
Indicates your position relative to the peers or organizations selected in the Risk Analysis set up in terms of external disclosure across all annual reports, including:
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SEC filings (10-K);
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Financial report; and
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Sustainability Report.
This metric uses the average ‘level of emphasis’ by risk to determine tiers.
Each tier represents a level:
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Lower tier - ‘Lagging’: indicating that your disclosure of the risk is less than that of selected peers;
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Middle tier - ‘Middle’: indicating that your disclosure of the risk is in line with that of selected peers; and
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Higher tier - ‘Leading’: indicating that your disclosure of the risk is greater than that of selected peers.
Raw data at the risk level can be obtained from the ‘Analysis’ Export folder (‘Disclosure Benchmark’ file). This can be downloaded from the ‘Overview’ page to identify the level of emphasis for each underlying topic.