Description of Methods Used to Assess Credit Risks for Individual Portfolio Management (Auto-invest functionality)

This description of the methods to assess credit risks for individual portfolio management is published on the Platform's website. The investors are informed of the changes in the methods by publishing an updated version of this description with the date of the last updates at the top of the webpage. The changes in comparison to the previous version are highlighted in blue for easier understanding.
Capitalia at least once in two years reviews performance and achieved compositions of the individual portfolios and adjusts individual portfolio management policies.

Credit risk assessment methods for project owners and individual crowdfunding projects

The main tool Capitalia uses for credit risk assessment on the project owner and individual project level is credit risk scoring. Capitalia has set guidelines for the credit risk and scoring of project owners and individual crowdfunding projects regarding such elements:

• The criteria and the key financial indicators used to evaluate the feasibility and sustainability of the crowdfunding project,
• Cash flow analysis,
• Industry analysis, including the degree of competition,
• Project owner’s knowledge, experience, and reputation analysis,
• Collateral analysis,
• The type of repayment schedule,
• The process of assigning a risk category to a particular loan,
• The data source and type used for the analysis.

The guidelines can be found in: Description of Credit Risk Scoring Model and Loan Pricing Methods.

Credit risk assessment methods at the investor’s portfolio level

Capitalia aims to minimize the investor portfolio concentration on a particular risk by providing functionality for investors to set their mandate criteria. Investors may set up their Auto-invest criteria manually, or choose suggested mandate templates.
Capitalia provides Investors with suggested mandate templates with different risk characteristics. The investor may choose any of the templates or enter their own settings.

Use of models for individual portfolio management

Capitalia uses credit scoring model for assessing credit risk on the project owner and individual project level. Description of the source of the data used as input for the model, the framework employed to ensure the quality of the input data, and governance arrangements for the design and use of the model are disclosed in: Description of Credit Risk Scoring Model and Loan Pricing Methods.

Automated decision-making on which loans are included in the investor's individual portfolio is based on the criteria set by the investor in their mandate, as described in the previous section of this document.