Industry sign banking idaho presentation fast
you hello everyone and welcome to a world none of us expected a few short months ago it wasn't that long ago in the past that we're all wondering what might trigger the next recession and the end of the current credit cycle perhaps the trigger has reared its nasty headin in the form of a virus I'm Rick Mazon scam chief economist at Ibis world and delighted to be joined today by Jocelyn Phillips head of Ibis worlds global production and research we have over a thousand people that are registered for this webinar today so I welcome you all I've looked at some of the lists and some of you people I've known for more than 15 years I'm assuming some of you are like I said Ibis world our distributed workers working on your homes now just wanted to make one announcement that we are recording this webinar and it's going to be available on our website we're going to try to keep it under a half hour today and it's basically there are two points here that we're going to cover the first recently over the last three or four weeks we got reached out by a bunch of clients of ours banking clients that wanted to know what the virus what Co vid 19 was all about in terms of the risks to their portfolio and what they should be doing about it so we actually went I did with another one of my colleagues Robert miles we started building these tools these fairly straightforward simple shock assessment tools basically that the clients were using on along with some of their own data which I'll explain in a minute as an offline product designed to assist our banking clients to analyze external shocks the example today is obviously the corona virus Jocelyn is then going to take over the baton from me and talk about something that some of you hopefully will know about what some a new product development called my Ibis world it's a customized way for banks to of information and analysis and she's going to go through a quick demonstration of course within the context of the virus and hopefully this will be useful for you you folks so you know I've spoken to dozens and dozens of bankers over the last month or so and you know one of the things that comes to mind is that if there's such an incredible flow of information and we all know this I mean the breaking news CNN the internet special reports by a lot of good organizations have come out including the IBISWorld webinars like this one podcasts on but also what I hear is is just a lot of anecdotal evidence and rumors and things that are going on in credit committee meetings and there's just a lot of confusion and I think what detective we wanted to take is well how can we build something how can we build some simple tools that the client itself themselves can actually use to make some very serious portfolio decisions we all know that this is only the beginning of the story we have no idea when it's going to end but now it's time to really act so it's not just that there's a quantity or too much information out there but there are also quality issues but at the at the end of the day it's really what is important to your organization sure we don't care about the rest of the world but it's really the question here today is what's important and relevant to your organization what sources of information are trustworthy and of course I think even more important relevant there's a lot of good information out there but is it relevant to a commercial bank in specifically your commercial bank and how can we define our priorities we can't all this noise all around we can't deal with all of it and that's what we're about to do today I'm kind of an actionable process and I'm going to talk about a process that has been vetted in front of a couple of clients have actually used it and what is the endgame so that's that's my objective today and then I'll hand over the ball to one to Jocelyn and she'll go into you know a few more details on this what is it all about first and foremost some of you that I've seen my presentations in past I like to say this is not rocket science and I don't think it is this is about identifying quality and relevant key risk indicators and then integrating these with banks specific exposures I'm going to go through this whole sequence in the next five or six minutes it's really a joint effort I this world so part of this whole procedure is all IBISWorld and part of it is all the client so we're defining a process you're more than anything else kind of a flowchart at the end of the day it's it's really all about you know common sense so these are tools to help you make some good decisions at least that's our objective so ok I've got I got six steps here and I'm just going to briefly kind of review them and show you how they're tied together you can always look at this presentation again online because I'm going to go through some of these things fairly quickly um but the first thing that the first step that we do is and this is Ibis world's starting point is we define appropriate key risk indicators and I'm going to go through a little bit of detail on that and then step two is its we tour the ball very quickly into the court of the bank um and we help them employ some loan exposure data and then we put these both together we integrate the data key risk indicators and performance indicators from the bank to integrate the data and and then we want to using these data sources we like to define or I should say define and refine priorities there's another kind of side issue here in terms of concentration risk and upstream and downstream we've developed a little spreadsheet that can help clients identify what a particular industry or line the business who's our major customers are and who their major suppliers are so we want to add this to the fray and then of course we need to punctuate it what are these policy implications and what is the endgame so let me start with this step one and we're using all official data here you could do this yourself it's not that difficult to do but the way it's organized I think is fairly interesting and this is what we have delivered to our banking clients we use international trade commission data and we focus our first thing was focusing on China trade both exports to China and imports from from China and so we have a definition of what is a particular industry now we define these by next codes so those clients that use nexton a up to grab exposure data and link in all kinds of backroom systems we have mapping tables as I'll show you in a second um so at the end of the day we're trying to rank on the US economic exposure you know to trade in particular in this case China trade but you know that's not the end of the story because there are a lot of other factors which I'll get to in a second but here is one of the spreadsheets just kind of condensed form of what we delivered to our clients basically you can see I've got a takes code and a five digit level an X description on the total trade exposure which I defined in the previous slide as a percentage on and then kind of kind of a level but as I mentioned this is not the end of the story there are other key risk indicators that we need to include in this step one and I've got a short list here of what we considered about a dozen different drivers economic drivers that we think are going to be substantially if they haven't already be substantially affected by the virus itself and by the panic that's going on obviously if you can see my arrow here consumer confidence and consumer spending are already being hit as if you look down further down on this list we've got travel domestic trip trips and inbound trips I've heard stories from people that are still traveling and how empty the airports are and all the residual connected industries that have to do with travel and tourism that have been hit as we're reading in the front page of the newspaper every day so we have a whole list of other variables here and what we did is for each variable and I'll just start with aggregate private investment aggregate private investment is a driver for a lot of different five and six digit industry so what we're trying to do is identify the most vulnerable key industries given that driver and here's a short list here ranging from machine shop services all the way to copier and office equipment wholesaling so pay attention here because we've done this for each one of these factors each one of these drivers we've identified the key industries that are that are vulnerable and this was delivered to our clients now steps two three and four now the ball is in the court of the client using four spreadsheets that we send to them they use in these steps the clients have been using IBISWorld makes mapping tables and using that to extract bank exposure data to populate the industry list this vulnerable industry lists that we compiled in step one some clients have suggested that they might be using some of the information that's available in our industry early warning systems such as our industry risk ratings and some of the volatility metrics to try to bring this into the fold and then chiapas step four is kind of defining probabilities I'm sorry priorities and we we did did this and we suggested this by clients kind of rank ordering their exposures and we suggested that they start with maybe the top ten fifteen or twenty percent of total exposures when we start to investigate these industries that are vulnerable we can't do everything so let's start with the most important thing remember I said priorities are important to the whole process not just trying to analyze the whole world it's impossible here's what here's what steps 1 to 4 might look like I know I've got a couple of clients that have done things like this I haven't seen all their files and certainly haven't seen their exposures but basically the output is you can see there's kind of two panels here the first panel is a IBISWorld code and then we have a mapping over to the next code which is a 2017 six digit a lot of our clients are using that mapping to go and extract data and then populate that other side then other panel that left that right hand side panel which are Bank exposures so we have outstanding loans credit and uh and and and then a total we think it's kind of important to you know to differentiate between outstanding loans and credit lines outstanding loans are it's it's difficult to call them in but if you have credit lines it might be easier for you to adjust them than to call in loans if you're really concerned about an industry so what we did here is we ranked ordered from highest to lowest and these are the priorities in this specific example this is not the end of the story because every industry has suppliers and every industry has its end markets and so we took we took a high exposure industry in this particular example and that was automobile engine and parts manufacturing curiously enough we've got a lot of clients that are exposed in this particular area so here's an industry in that industry had from that previous slide in my example has a total direct exposure which is 2.3 million dollars you can see there in the in arroba behind the yellow now what about their suppliers well in this particular example this industry that's highly exposed by this hypothetical Bank they've got a couple of industries that are suppliers to this industry so they have concentrations there and exposures there at the same time they have downstream industries and those downstream industries are the ones that they sell to karna Toma Beale Manufacturing truck and bus manufacturing and then a total there and so what the clients were suggesting they do and I know that a couple of them have done this particularly in their high exposure industries is that they've added this to the total exposure and this is really concentration pool right here for a specific industry using the supply chain um and I've got this um we've got this in the spreadsheet that we've been sending to clients as part of this whole package so you get a total exposure under this what are the policy implications well I'm not going to tell you your business because I'm not a banker but the one that seems to bother me the most are managing concentrate and risk all that usual stuff assessing the limits determining appropriate risk pricing of loading segments and then of course refining grading models we have a lot of our clients that are using our data and our risk ratings to drive commercial score cards while all this has to be updated given different scenarios or what may happen down the line with vulnerable industries vulnerable to the panic the virus panic and then the last but not least and we're all familiar with this particularly post post the financial crisis is capital planning and stress testing the interesting rub here is that we're in transition to de Cecil and now if we've got we've got this complication that's coming in right now in terms of what's going on with the panic and the economic impacts of of the virus and then lest we forget there's always business development I've been told by a couple of couple of my colleagues that they're not really thinking of business development but we have to keep this in you know in the back of our minds and planning going forward to try to identify safe than sounding lending opportunities not just at this time of stress but when we start to resolve the stress hopefully that will be sooner than later in short we're really providing a decision support actionable tool for effective portfolio and enterprise risk management so these are tools that are existing they've been tested we're doing a few refinements now so we can hopefully deliver it in a little bit streamlined form to the clients and with that Jocelyn um it's all up to you great thank you Rick I appreciate the introduction but I'll just repeat once more for anybody who maybe didn't get to catch the beginning of the presentation my name is Jason Phillips I'm our global head of products and product development here at Ibis world and I just want to take a minute to walk you all through some things that are available on our new my is forum platform that have been developed as result of some conversations that I've even had with some of you who I think are on the line earlier this week about what all of you are looking for when it comes to more information around the current situation our we've got a team of about a hundred analysts globally and they've been working more or less around the clock for the last week or two in response to what we're hearing from you all as well as we've heard from stakeholders as diverses higher-ups in the US federal government asking us for supply chain information so we we put a lot of work in and will continue to do so to keep the information current for you all in the weeks to come as things continue to develop so I'll just show you where a few things are right now most of you I'm hoping have seen the my Ibis world platform before by now as a front-end platform for the user it obviously has a lot more features than we had previously it's got more robust datasets more easily manipulable datasets but on the backend it also allows us to be a lot more flexible in terms of delivering content through the reports and into the database more quickly than we were able to previously so I'll show you a couple examples of where you can find the content in the reports in the database right now one that I've pulled up here battery manufacturing in the United States this is a industry that we knew pretty early on was going to take a hard hit just because of its close supply chain links to China so for as the reports that the team is updating priority right now are the ones that are most heavily hit by the ones we're expecting to be the most heavily hit by the exposure factors that Rick alluded to earlier for any of those reports and all of our reports updated going forward they're going to have this impact update statement at the top that you see on my screen now this is something that we heard a request from from a variety of clients both in the banking space and in other spaces how can we quickly get an eye on you know the analyst has put this work into the back end to make sure that the report is up-to-date as possible with all t
e key drivers how can we make sure that the user can quickly see what's changed as a result of the backend work that the analyst has put in so this is something that was relatively easy for us to switch on on is my ibisworld platform and it still is going to live within everything else you seeing in our report so throughout the definition performance supply chain that's highlight some of the industries that Rick had spoken to before that go into some of that second level analysis in the exposure tool and you're still gonna be able to scroll down on the side here and get to the risk reports and the other content that you're used to being able to access alongside an Ibis world industry report and just for the record for anybody who any clients who have access to the early warning system module that Rick had spoken about before that you didn't know already that's going to be up here under expert tools to click through the US and then there's your links of the early warning system tool right there so another thing that our analysts have been working hard on over the last few weeks is a page that is going to show some of the high-level takeaways from the exposure analysis that Rick has done so I'll show you this will page should go live by the end of today and at the end of this webinar I'll send out an email to everyone in attendance with a link that you'll be able to use this right away but this is a page that's going to show how coronavirus industry exposure effects industries around the world so at its highest level you've got industry exposure intensity by country where Ibis world currently has reporting so you're able to click through and see four different countries how many industries are being impacted at a low medium or high level and then on the left side you're going to be able to click through to a variety of sectors and see which industries of that sector are exposed at a low medium or high range by country as well so this will just be a quick way this is taking again into account as you can see China exposure supply chain links and the business environment links that Rick alluded to before the specific factors that go into this algorithm will likely change over time as we learn more about what what's happening day to day in the economy and as we hear more from you all about what factors are most important for you but this is just a quick take away without getting into the nitty-gritty of Rick's tool and Rick's tool I should also mention we'll also evolve over time because as we learn more about what's going on we learn more about second-order effects in the economy then we will we will update that tool and update anybody who's got a copy of it so that's all that I've got for us today so what's going to happen from here is that anyone anybody who's attended this webinar today is going to get a link to this page if you're interested in the tool that Rick walked through before which is what was used to put that page together then will direct you to contact your ibisworld CRM who will be able to give you some more information about how to get that tool in hand so that you can start using it now and if you don't have an Ibis world CRM then you can just go to our front page WWF's worldcom and reach out to us through there and we'll be able to get you in touch with somebody who will be able to give you a copy of the tool that's all we have for today so thank you so much for joining us especially during what I'm sure is a busy time for all of you and yeah we appreciate your attendance today and we'll reach out afterwards for some more information about what we can share so thank you so much goodbye