Written by Thomas Mutsimba, an author, an Enterprise Risk Management Professional. Thomas is an author endowed with advanced actuarial analysis and advanced forensic analysis
Rating Agencies have become a topical matter in Global Risk dynamics. Postured at national economies and their governance levels delineating to entity debt-equity risk dynamics, they are always at the forefront of depicting their opinion analysis regarding the rating architectures deverberated at classical rating scales. Rating Agencies are independent reviewers of global entities and domestic entities financial positions focusing on aquarian distance period analysis of debt-equity costs positions on a seasonal and adhoc basis. This definition is not a common definition, but it is a definition that lays bare what is neither revealed nor understood; what is the aquarian distance period analysis? It is the analysis of financial positions degenerated to input fundamentals at actuarial acquired skill sets from lands that are afar. But because data is beamed on world wide web sites, it is readily available to the public or users of rating agencies reports. Aquarian here postures the life cycle that comes with a better rating position for any entity or national government.
We spoke of debt-equity dynamics. Why are we singling out these components; that is the debt-equity one? It is because this is a huge contributory functionary factor of the position of Rating agencies posturing quasi PESTEL dynamics or fundamentals meant to asynchronate opinion positions stated in rating classes. Information is available on the meaning of the rating classes but there are five positions that come out, that I have studied but these positions or factors, risk bound are not easily seen. But through analysis and visionary gifting deverberating though my writing, I serve the world with my opinion. This opinion will stand the test of time when dynamics shift between preferences for Rating agencies to use and also whether nations or entities will hold the advice of existing rating agencies and their brands. There are five components as alluded to, that I will explore in the next paragraphs:
Component 1: Rating Agencies Capital Preservations Proportions outlook
Rating agencies now; as they look at the risk factor of politics in nations have factored in premium risk root-cause effect quantum factor in Capital Preservations proportions outlook. What are Capital Preservations proportions outlook? Capital Preservations proportions outlook refers to retention of capital input fundamentals ratios that posture debt to equity Solvency fundamental portion effect on the overall outlook of the entity. This fundamental is the most universal one because not much in terms of a thorough fair view of truthfulness or veracity of how the risk quantum factor component is calculated. Nations in the developing world, so as they are called find themselves clutching at straws, squabbling on what decision factors to take. In order to appease the methodical decision opinion postured by Rating agencies, Capital Preservations proportions outlook are foremost calculated at risk premium rates of classification and ranking of outlooks using unconventional, not fully disclosed predictive analytics of where nations are. Preserved Capital is retention-based Capital. As one scenario and revelation may come out for large global entities that are looking for capital or foreign direct investment to improve their product or service offering Capital Preservation ratios, proportional outlook is not the best way of determining the real exposures. One question that has come to the fore of the markets of mostly developing nations is the influence of the political environment on key strategic decisions of national importance as well as their foreign policy decisions. The following has come to the fore:
- Solvency ratios of politically disposed nations;
- The agricultural factor or food production impact on food sustainability;
- Economic structural adjustment programmes that do not resonate with the pattern of development of these nations;
- Specialist advisory that is too dependent on rival western economics which are at the later stage of maturity;
- Capital Preservation-physio methodology. What is this? This is a never seen and never heard methodology that postures the masculinity of economies basing on indexed demographic factors rooted in unfair profiling that does not consider other architectures that exist in different nations. Demographic posturing and profiling is rampant but it is difficult to quantum-base in risk analytical factors. To give an example, African economies are in no doubt immature phases of development and of course measured by Independent risk consultants factor-reports. A factor report is a trigger momentary risk tenure that proffers investment platforms an opportunity to tactically allocate debt-equity imperatives on National Statements of Accounts in Governance Authorities. Now, looking at western nations; their debt structure built in Industrial and Manufacturing economies; their debt-equity ratios posture different views. If you delineate these fundamentals to enterprises in nations on earth you are bound to have a scale of balancing positive and negative factors tilting both sides and both ways. Why is that so? It is so because there are other factors that are rooted in architectures of both nations that is the developed and developing. Hence, therefore, what is the best solution? The best policy is not single-handed view based on authoritative or bureaucratic view but to draw up key non-political but all-encompassing policy. I write this in my own view, and it is imperative that Rating agencies re-look at their methodologies. This is not a political article, but it is a constructive degeneration of actuarial view rooted in economic architectural fundamentals of all entities.
Debt traps will be imposed. But how do debt traps get imposed? Debt traps are imposed through superimposition of befitting views of development without understanding the course path, the rooting architectures of nations. Note that debt is a big trap for entities or nations trying to get off the ground.
Component 2: Risk Analysis. The modelling of Rating Agencies actuarial monitoring systems
What are we referring to on this component? We are referring to using actuarial modelling at a detailed level of risk analysis or profiling of nations. As opposed to the exercise of circulating questionnaires that are based on a tick box approach, the world yearns for. Modelling here, is required for Rating agencies using perpetual Actuarial techniques. Why is this important? It is important because in my view risk analyses undertaken now are flawed. You will probably be told that Rating agencies are manned by highly educated teams. In my view a process elements approach is required to beef up their work on nations. Teams must be aware of the impending architectures or structures in these nations whose sole focus is to focus on censorship motion of risk investment policies. Impending risk possibilities come from individual interests of nations that are overarching.
The risk discipline is not an academic exercise, at least it is in others view but succinct proper risk analyses to aid the work of Rating agencies is required. Vibrancy in their independence is not attested to because of their location or the supposed education laden tenets of the Rating agencies and their work. The world will need a paradigm shift in this tenet of world-wide financial institutions who require certificates of good and sustainable ratings to be released in order to unlock funding. The following is noted in the Analytical Rating agencies risk modelling:
[1] The genesis of architectural oblivion;
[2] Rating agencies lag behind in using advanced actuarial techniques monitoring from a universe strategic approach;
[3] Unequal playing fields as far as rating is concerned;
[4] Boards and Committees of the world entities lagging in the powerful use of advanced actuarial analysis that focus on input fundamentals that are critical to drive economies;
[5] Dependence on debt. Although debt is considered cheaper in the long run it destructs innovation requiring continuous working capital;
[6]Rating agencies today only come at their will or when invited [adhoc] but the truth is Rating agencies are only required when a quest for new funding or regulatory laws inspire them to do. Of course, the world will say it is law. But of course, law does not operate in isolation to the true patterns of unfamiliar business architectures. The world lags because of self-imposed oblivion. Self-imposed oblivion is the great threat as it chokes the spirit of truth in handling rating matters;
[7] Rating agencies subjugate and subdivide the world. These architectures of separation by regional economic groups create clusters that give an uneconomic and inappropriate view of the entire face of the economies of the earth. The world is viewed with actuarial sense for it to make sense. This author, with special interests in actuarial analysis and forensic analysis writes from a dimension of visionary glory of sustainable wealth creation and sustained management of risk models that seek to optimize revenue.
General Rating agencies are those agencies that do not ascribe to the specifics of a particular narrative. Unfortunately, what happens behind the scenes is unknown to the public. Economies in Africa and the rest of the world comprises of people who are hardworking and who are crying for a better sustainable wealth creation portfolio management.
Component 3: Rating Agencies today to do not have techno-divisional partial separation of roles of Institutions
Legislative institutions and international institutions sit at their round tables. But they sit there at the auspices of their law. The world, the risk universe is bubbling with terse architectures, real terms and real Business Intelligence [BI] that is neither practical but that speaks of a landscape that is endowed with resources. This author writing is a scribal gift because he neither studied nor sat in a class but because he operates from a higher dimension; everything is grafted in analytical gifts.
The risk universe requires techno-divisional partial separation. Technology as a core-binding tenet in economies is the one that fosters techno-powered divisional partial separation. Leveraging of algorithmic generation of commands in actuarial models, a lot can be discerned by these Rating agencies. In actual fact, it is a lot. It is a lot in the sense that Rating agencies must not operate as quasi-partial agents of subjugation but the truth and real growth instigators. Of course, the nations let alone the public are not privy to the adjudicated languages or jargon used by the so-called Rating agencies. Masses bear the brunt of oblivion as they are not educated on what a Rating agency is. Nurturing the decelerated fundamentals using actuarial techniques is the proliferating education in academic terms that does not inspire practical application of rating methodologies and techno-powered actuarial testing on economies of developing nations. This for so stated is a contentious issue as debt doldrums loom for many nations that are at the end of the market. Techno-partial separation improves and encourages incubation detention-based reporting that is lacking in various facets. Actuarial analysts will impend the finance arena in the future. It is a done deal in the other dimensions. True structures built on powerful BI.
Component 4: Actuarial Platform Tense
The Actuarial Platform Tense. What does it mean? A platform tense is the motion dynamics of actuarial input fundamentals in economic modelling of financial leverage data that comes from populated models. This actuarial tense is a perspired status quo driven by a variety of fundamentals. Motion dynamics that are currently wreaking debt-equity positions of nations do not posture real time issue-based listing of what needs to be done by Rating agencies.
Rating agencies are not economy managers neither are they economy securocrats. It is a dangerous scenario for the sinking debt profiles of nations. The Actuarial platform tense is misappropriated. It is nurtured in the degenerative populative opinions built on global perversion of asymptomatic architectures. But they run deeper into opinions of ratings that are not built on powerful real time BI meant to improve the nations. Again, it is a nutty issue.
Component 5: Actuarial views insufficiently perpetrated. The Emerging market trends
Since we note that Actuarial views are insufficiently perpetrated or deployed in the rating of nations debt-equity positions, there are emerging market trends. Trends that are even showing, themselves up. What are we talking about here? Global Rating agencies wielding unannounced power, authority and dominion over unsustained nations reeling in the phases of immaturity and transformations. Emerging trends must be on the radar of Global Risk Professionals. It is not an issue of recording standard events in the Risk registers but “black swan”, the adage comes to mind. It is a nutty issue. Market trends are posturing themselves in the following ways:
- Product and Service optimization booming through innovation that cannot keep pace with debt-equity positions;
- Economic growth miscalculated. Of course, critics would say there is no empirical evidence; this is symptomatic of this world where the seen architectures posture a view nullifying the impending architectures;
- Huge deficit of cognitive thinking on quantum risk-based assessments;
- Impending architectures are consuming reserving to such an extent that labor issues, dwindling income per capita is being miscalculated;
- The fact that market trends are based on singular attributes. What does it mean? World Global risk is not the same. Until the professionals start recognizing risk universes impeding from other galaxies, this world will not be elevated to high revelations of actuarial mechanics;
- The world is not there yet. The talk about industrial revolutions is a very low phase of innovation;
- Incapacitation is at a very high level;
This article on Actuarial mechanics of Rating agencies is an introduction to technical aspects of these mechanics. I will further elucidate my visionary view of what is about to happen. As I have already alluded to, I write from another dimension of visionary glory. This piece will be referred to in the fullness of time.
Disclaimer: All views expressed in this article are my own and do not represent the opinion of an entity whatsoever, with which I have been, am now, or will be affiliated with.
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