Risk Alert provides for a comprehensive assessment of the risks within an entity. However, it is often important to understand how a company compares to other relevant companies in its industry, geographic region or size class? Such a comparison can be very important in helping to focus management’s attention on risk areas requiring priority attention.

Risk Alert can compare the data recorded for a company to the available data for other companies in the same industry, geographic region or size class. Based on this comparison, Risk Alert can adjust the risk rating for the company up or down to take into account its relative position in the industry or other relevant benchmark.

Risk Alert automatically uses industry data when performing the financial ratio analysis. Risk Alert can also use the results from other companies that you have analyzed to determine the relative strength of the entity based on the responses to all the indicators.

Risk Alert produces a benchmarking analysis indicating areas where the particular entity’s risk attributes are "worse" than the median response for entities in the relevant comparison group.

The Benchmark Data screen is displayed by selecting the benchmark tab on the main window.

This screen displays a graphical view of a comparison of the current entity to its industry, a category at a time. The two lines on the graph display the industry average responses and the responses for the current entity. Indicators where the entity response is higher than the industry average represent areas where the entity is above average. Any indicator which has not been answered is not displayed and is not included in the benchmark multiplier calculation.

Below the graph, the details of the calculation are displayed one indicator at a time. Beside the indicator text are the possible responses with the number of companies in the industry which gave that response. The background of the response chosen for the current entity is changed to a light blue. The indicators in the category can be scrolled through using the next and previous buttons.

The left hand window displays the benchmark multiplier for each category. Benchmark multipliers are only used for categories that have the box checked beside them under the column Use Multiplier. The use of benchmark multipliers can be enabled or disabled on the parameters screen by clicking on the appropriate box. The use of benchmark multipliers defaults to the settings maintained in the Category Importance Weights screen.

The set of companies used to compute the benchmark multipliers can be selected using the entity industry or one of the key word descriptors. Click the checkbox beside the desired source.

Risk Alert uses the benchmark data, if it is available, by computing a benchmark multiplier for eight of the nine categories of indicators. (Benchmark multipliers are not computed for the Macro-economic factors as these should be consistent across all companies and industries.) The benchmark multiplier is multiplied with the risk score for the category to produce an adjusted category risk score. If the entity is better than industry averages, then the benchmark multiplier will be less than 1 and the risk score will be reduced. If the entity is worse than average then the benchmark multiplier will be greater than 1 and the risk score will be increased.

Benchmark multipliers are computed by comparing the response for each risk indicator for the entity against the industry average response. Indicators which have not been answered are not used in the calculation of the benchmark multipliers. The results of these comparisons are aggregated for every category.