Warning systems and AQR. The impact on the real economy

The financial system on the one hand and the legal system on the other almost simultaneously introduce the so-called EARLY WARNING SYSTEMS (EWS). What is it about? It is the systems of indicators, parameters, trend observation systems that can make people grasp the signs of a business crisis and therefore able to activate the early warning systems (i.e. early warning).

The recent reform of bankruptcy law, in fact, provides for the introduction of systems capable of capturing the anticipatory signs of the crisis in order to promptly entrust the company to the care of experts. On the other hand, the recent introduction of the IFRS9 accounting principle with the consequent creation of the Stage2 credit category, the so-called underperforming loans, it requires credit institutions to equip themselves with alert systems capable of detecting as soon as possible the start of a process of deterioration in credit quality.

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