Industry Risk Score

Industry risk score contrasts risk in a business’s industry against that of all other industries. In many cases this risk determines or considers how much credit can be granted or allocated among industry groups. Industry risk score measures the overall risk for the industry.

Industry risk uses the debt-to-equity and overall risk in the SIC and compares it to how bank rules allocate funding. Banks establish a company’s debt-to-equity ratios based on the nature of the industry and associated business models; e.g., a leasing company would be given a higher debt-to-equity ratio compared to a restaurant based on what is needed to run the business coupled with their ability to pay.