PoD®: Risk isn’t measured anymore, it’s predicted
Contents
Written by
Chris Oatts
“Credit teams have always had to translate a score into a judgement call. PoD® closes that gap: a true probability of distress, updated as events happen, with every factor behind it laid out so users can see exactly why a company’s risk has moved.”
Chris Oatts — Head of Data and Product Strategy
Probability of Distress: now available on Company Watch
Probability of Distress (PoD®) is now live on the Company Watch platform for Gold subscribers. It gives every UK company — over 5.7 million of them, including recent incorporations — an individual percentage score showing the likelihood of that company entering financial distress within the next 12 months.
It’s accessible across the platform: on a company’s profile, in Portfolio Overview, through Monitor alerts, and via the Company Watch API.
What is Probability of Distress?
PoD® is a machine-learning model trained on Company Watch’s UK dataset. It calculates, as a percentage, the chance that a company will enter distress within 12 months.
Distress is defined as administration, receivership, a company voluntary arrangement (CVA), a creditors’ voluntary liquidation, or compulsory liquidation. To assess that risk, PoD® draws on a broad set of signals: annual accounts and financial ratios, County Court Judgments, charges, petitions, filing behaviour, directors and group links.
Where the H-Score® assesses purely financial health from a company’s accounts alone, PoD® adds non-financial signals such as live court, filing and group data, so scores update as events occur rather than when accounts are filed. The two are designed to compliment one another and can be used side by side.
Why a true probability matters for financial risk
How likely is this company to fail in the next year? It’s the question behind almost every credit, procurement and onboarding decision, and a percentage answers it more directly than a relative rating. PoD® helps teams:
- Prioritise large portfolios: Sort thousands of customers or suppliers by likelihood of distress and focus attention where it’s needed most.
- Weigh risk against exposure: A probability can be set directly against the value at stake, making it easier to decide how much credit to extend or how large a contract to award.
- Explain decisions: Factor-level breakdowns give credit committees and auditors a clear, defensible rationale behind every score.
- Get earlier warning: Because PoD® responds to live events such as new CCJs, petitions or late filings, changes in risk surface as they happen rather than when the next set of accounts is filed.
Understanding the score
Every PoD® score comes with the context needed to act on it:
- Percentage score: The company’s probability of entering distress within 12 months, shown alongside its industry average for comparison.
- Risk bands: Five bands, from Minimal to Critical, place each score in context at a glance. In internal model evaluation, 1 in 6 companies flagged as Critical entered distress within a year.
- Contributing factors: Each score breaks down the factors driving it, with a short explanation for each. Red factors increase risk and green factors reduce it.
- Score history: A timeline of how the score has moved, zoomable to the day a risk change occurred.
- Credit and contract limits: Suggested limits are shown alongside the score to support day-to-day decisions.
Monitoring PoD® across a portfolio
PoD® is built into our Monitoring functionality, so users can track scores across every company they watch and filter by risk band, region or industry. Custom alerts can be set to trigger when:
- A company’s PoD® rises, falls, or enters a chosen risk band.
- A company moves into a different risk band.
- Its credit or contract limit changes.
- A threshold set by the user is crossed. Alerts are delivered in-platform, by email, or via API.
Built with credit professionals
PoD® was developed and refined through an extensive beta programme with 64 credit and risk professionals. 91% of beta users rated it very useful or higher, and 70% said they trusted PoD® as an indicator of distress within weeks of first use.
As with any predictive model, PoD® is a probability rather than a certainty, and it works best alongside the H-Score®, Company Watch’s wider data, and a user’s own knowledge of the relationship. The full findings from the beta are available in the PoD® Beta Insights report.
Ready to see risk earlier than ever before?
Discover how PoD® can transform the way you assess and manage risk today.
