Are you involved in assessing individuals or companies’ RISK LEVEL?
Introducing the Behavioural Macroeconomic Risk Theory (BMRT) AI powered Software.
Do you manage RISK in your sector? Such as Banks deciding which entities to give loans, Insurers ascertaining bespoke risk cover, Venture Capitalists weighing the potential of a start-up, Investors deciding if to divest or increase holdings, Securities Trader (eg stocks) doing fundamentals assessment, or any other business sector where transactions and returns are spaced by time? Let's face it we know there's no one-size-fits-all risk assessment as individuals, companies, circumstances, targets, capacities, and the like, are as varied as sand grains on a beach.
Let me introduce the Behavioural Macroeconomic Risk Theory (BMRT) Software. This is an AI powered Middleware Dependent Software that works with your Accounting Software are , ERPs, to capture the complex and dynamic relationship between macroeconomic conditions, firm risk, profit potential and the individual human component case by case to allow for ideal outcome prediction and profit.
It incorporates concepts like;
120 ECONOMIC CONDITIONS (eg "Unemployment rate”, “Inflation rate”, “Interest rates”, “Exchange rates”, “Consumer confidence”);
147 FIRM BEHAVIOURS (eg “Goal setting and planning”, “Time management”, “Innovation/creativity”, “Comms skills”, “Problem solving”, “Strategic thinking”);
212 FINANCIAL FACTORS (eg "Debt2Equity Ratio", "Beta", "Diversification", "CR Rating", "Market Capitalization", "Earnings Volatility", "Price-to-Earnings Ratio", "Earnings Per Share");
169 HUMAN FACTORS (eg “Anchoring bias”, “availability heuristic”, “framing effect”, “sunk cost fallacy”, “cognitive dissonance”, “fundamental attribution error”, “reactance”, “overconfidence bias”). ETC
Sounds like a tool you may need..?
Only that it is on testing phase and we are seek technical partners for the program, partial deployment and real use case deployment phases. Hence this post.
Inbox me for any input or please repost so we reach our next partner.
BMRT Software uses mathematical modelling techniques and here's a glimpse of 3 of its 62 modelling and basing formulas which crunch your data to feed the AI, for assessment, pattern forming and continual improvement of risk assessment:
Weighted Reference Point:
R* = alpha_1 * pi_(t-1) + alpha_2 * E(pi_t) + alpha_3 * A_t + alpha_4 * S_t + alpha_5 * N_t
Autoregressive Moving Average (ARMA):
X_t = c + phi_1 * X_(t-1) + … + phi_p * X_(t-p) + theta_1 * e_(t-1) + … + theta_q * e_(t-q) + e_t
Utility Function:
U(x) = { (pi - (alpha_1 * pi_(t-1) + alpha_2 * (1.1 * E(pi_t)) + alpha_3 * A_t + alpha_4 * S_t + alpha_5 * N_t))^alpha if x >= 0 -lambda * (-(pi - (alpha_1 * pi_(t-1) + alpha_2 * (1.1 * E(pi_t)) + alpha_3 * A_t + alpha_4 * S_t + alpha_5 * N_t)))^beta if x < 0
where pi = P * Q - (w * L + (r + 0.02 * D/E) * K + (v + 0.05 * i))
and x = pi - (alpha_1 * pi_(t-1) + alpha_2 * (1.1 * E(pi_t)) + alpha_3 * A_t + alpha_4 * S_t + alpha_5 * N_t)
to assist in making risk evaluations relative to a reference point.
Inbox me for input or repost so we reach our next partner...
Read more:
With multiple uses (or data set training), the machine learning AI component will become more precise over time in weighing probabilities in a non-linear and asymmetric way, and therefore in prediction and projections. Users can set an adjustable risk level as a reference point and let the algorithms give a case by case grading for each scenario.
I initially wanted to write a white paper about our newly formulated Risk Management Theory that incorporates traditional RISK ASSESSMENT tools, environment and human factors into the constructs to derive a more precise risk quotient of an entity, individual, or even stock being tested. Then I though to myself, hang on, instead we can make this into a proprietary AI powered tool that will help even more people, than let the paper gather dust in some economics white paper journal.
The traditional models and formulas used in risk assessment are limited, and their outcomes are unreliable. BMRT revolutionises risk assessment by integrating the human component, taking into account the psychological and behavioral factors that drive decision-making.
Here are some examples of the ASSESSMENT models and FORMULAS that are commonly used in the risk assessment field for each of the 5 sectors mentioned above:
1.Banks deciding which entities to give loans:
- Credit scoring models, such as the FICO score or the VantageScore, which use factors such as credit history, outstanding debt, and payment history to assess creditworthiness.
- Debt-to-income (DTI) ratio, which measures the borrower's debt relative to their income.
- Loan-to-value (LTV) ratio, which measures the value of the loan relative to the value of the collateral.
2.Insurers ascertaining bespoke risk cover:
- Actuarial models, which use statistical analysis to assess the probability and cost of future events, such as accidents or illnesses.
- Risk-based pricing models, which set insurance premiums based on the perceived risk of the insured event.
3.Venture Capitalists weighing the potential of a start-up:
- Discounted cash flow (DCF) analysis, which estimates the future cash flows of the company and discounts them to present value.
- Market multiple analysis, which compares the company's financial ratios to those of comparable companies in the same industry.
4.Investors deciding if to divest or increase holdings:
- Technical analysis, which looks at market trends and patterns to predict future prices.
- Fundamental analysis, which examines a company's financial statements, industry trends, and other qualitative factors to determine its intrinsic value.
5.Securities Trader (e.g. stocks) doing fundamentals assessment:
- Price-to-earnings (P/E) ratio, which measures the price of a stock relative to its earnings per share.
- Price-to-book (P/B) ratio, which measures the price of a stock relative to its book value.
- Dividend yield, which measures the dividend income generated by a stock relative to its price.
With each of these, and many more I did not mention, the models and formulas used in risk assessment are limited by their assumptions of normal distributions, stationarity, and linear relationships. These assumptions do not reflect the complex and dynamic nature of financial markets and economic conditions. Additionally, these models often fail to account for the psychological and behavioral factors that drive decision-making, leading to unreliable outcomes.
Furthermore, traditional risk assessment models do not consider the impact of macroeconomic conditions on individual firms and their risk profiles. They also do not account for the unique characteristics of each firm, such as their goals, strategies, and human component, which can have a significant impact on their risk profile.
BMRT, on the other hand, leverages advanced Artificial Intelligence and machine learning techniques to capture the complex and dynamic relationship between macroeconomic conditions, firm risk, profit potential, and the individual human component. This allows for more accurate risk assessment and prediction of outcomes. By integrating behavioral and psychological factors into the analysis, BMRT provides a more comprehensive and holistic view of risk, addressing the limitations of traditional risk assessment models. The limitations of traditional risk assessment models make them unreliable for decision-making in today's complex and dynamic financial markets. BMRT offers a revolutionary approach that addresses these limitations by integrating the human component and accounting for macroeconomic conditions, firm behavior, and financial factors.
Why choose BMRT?
Here are just a few reasons why the Behavioural Macroeconomic Risk Theory (BMRT) is the best choice for risk assessment:
1.Innovative Approach
- BMRT revolutionizes risk assessment by integrating the human component, taking into account the psychological and behavioral factors that drive decision-making.
- BMRT is powered by cutting-edge AI technology, ensuring accurate and reliable results.
2.Comprehensive Data Analysis
- BMRT incorporates over 120 economic conditions, 147 firm behaviors, 212 financial factors, and 169 human factors, resulting in a comprehensive analysis of risk.
- Our middleware-dependent software works with your accounting software and ERPs to capture the complex and dynamic relationship between macroeconomic conditions, firm risk, profit potential and the individual human component.
3.Accurate Predictions & Projections
- With the power of AI, BMRT is able to make accurate risk predictions for individual cases based on the unique combination of factors involved.
4.Transparent Methodology
- BMRT's methodology is transparent and easily explainable, allowing for easier understanding and communication of risk to stakeholders.
5.Increased Profit Potential
- With BMRT, you can predict the ideal outcome and maximize your profit potential with greater accuracy than ever before.
- Our software takes into account all relevant factors, from economic conditions to human decision making, allowing you to make informed decisions and minimize your risk.
6.Versatility
- Whether you're a bank deciding which entities to give loans, an insurer ascertaining bespoke risk cover, a venture capitalist weighing the potential of a start-up, an investor deciding if to divest or increase holdings, or a securities trader doing fundamentals assessment, BMRT is the tool you need.
- BMRT is customizable to your specific needs, providing tailored risk assessments for every situation.
7.Scalable Solution
- BMRT can be integrated with your existing accounting software and ERPs, allowing for seamless integration into your existing systems.
8.Expertise Backed
- Our team includes experts in economics, finance, and AI, and we each are recognised in our fields with a verifiable track record for our contributions to our respective sectors.
Choose BMRT for the most accurate, reliable, and comprehensive risk assessment on the market.
Please use our Contact page on this site to reach us or alternatively book an appointment on our Calendar and we will confirm our Teams or Zoom link for a comprehensive discussion.