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Measuring Financial Resilience: Edinburgh Scoring Conference

The last time I attended the Credit Scoring and Credit Control Conference at the University of Edinburgh in August 2017, my colleague Gerald Fahner and I spoke about two ostensibly different topics. In my presentation, “IFRS 9 – Comply and Compete,” I discussed how lenders could improve decisions across the consumer lifecycle by managing drivers of expected credit loss under the (then) new IFRS 9 international accounting standard. In Gerald’s talk, “Estimating Consumer Default Sensitivities to Financial Stress Factors Through Counterfactual Analysis,” he shared his research results regarding the range of changes in consumer payment performance in response to financial stress, uncovering latent portfolio risks that manifest during an economic downturn such as the Great Recession.

This year we will be revisiting and combining some of the same concepts from our earlier sessions. Gerald’s research presented in 2017 laid the foundation for the new FICO® Resilience Index, an innovative complement to traditional FICO® Scores that rank-orders consumers by their resilience to economic stress. We will provide an update of our latest analytic developments, including the major enhancements made to the latest release, FICO® Resilience Index 2, and how the score has performed during the pandemic economy. We will also share insights from early client adoption stories and best practice use cases of FICO Resilience Index to – once again – improve decisions across the consumer lifecycle, in all different economic environments. The analytics we will discuss can be especially useful in dealing with vulnerable customers.

Chart showing advantages of FICO Resilience Index
The FICO Resilience Index has benefits in all economic scenarios.

Sadly, the conference is entirely online this year due to ongoing COVID-19 restrictions, so I won’t be able to wander around Edinburgh again to learn more about its rich and sometimes tragic history. In my 2017 post-conference blog, I shared some insights from a guided tour about the city’s experience in 1645 dealing with its worst ever outbreak of bubonic plague, including the eerily prescient comment: “Who knows how many lives would have been saved with modern medical techniques and contagion modelling methodologies…”

Credit Scoring and Credit Control Conference XVII will take place between Wednesday August 25th and Friday August 27th, 2021. We hope you’ll attend what should be a fascinating conference. Seven sessions will feature FICO speakers, including our presentation, “Using Borrower Resilience to Inform Strategies Across the Credit Lifecycle and Across the Economic Cycle,” which will take place at 6pm UK time on Thursday, August 26th.

Please visit the FICO Blog to keep up to date on all of FICO’s latest insights and offerings, including our four-part series regarding the use of FICO® Resilience Index in decisions across the consumer lifecycle, “How to Address Portfolio Risk Volatility Through Economic Uncertainty.”

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