RESIDUAL RISK ANALYSIS SYSTEM, METHOD AND COMPUTER PROGRAM PRODUCT THEREFOR
Systems, methods and products for determining residual values of asset portfolios are disclosed. In one embodiment, a system includes a server computer coupled to a network and to a data storage device. The server generates residual value curves for each of a set of item types and stores them. The server computer also receives and/or maintains information defining a set of items in a portfolio. When an assessment of the portfolio is initiated, the server determines a residual value for each item in the portfolio by identifying a corresponding one of the item types, retrieving the residual value curve corresponding to the identified item type, and determining a future value of the item based on the retrieved residual value curve for the corresponding item type. The server then aggregates the individual residual values into a residual value for the portfolio and enables access to this value.
1 . A method, comprising:
at an initial time point, a residual risk analysis system determining a residual value curve representing forecasted values of an item over time as affected by a plurality of forecasting variables based on a plurality of general assumptions, the residual risk analysis system embodied on one or more server machines having at least one processor and non-transitory computer memory including instructions translatable by the at least one processor, the plurality of forecasting variables including
modifications that reflect any changes to the item,
macroeconomic factors nonspecific to any industry to which the item is associated,
microeconomic factors specific to an industry to which the item is associated,
depreciation representing a natural change in value occurring as the item is used over time,
competitive sets including all reasonable substitutes for the item, and
locality representing a valuation adjustment relative to a geographic location;
receiving, from a plurality of clients communicatively connected to the residual risk analysis system, configuration information for different scenarios, each of the different scenarios testing an impact on a forecasted value of a portfolio of physical assets, the configuration information for the different scenarios containing custom assumptions from the plurality of clients; and
subsequent to the initial time point, the residual risk analysis system initiating and performing an iterative process of fine-tuning the residual value curve for the item, wherein the iterative process comprises:
analyzing the custom assumptions from the plurality of clients;
determining a trend for each of the plurality of general assumptions associated with the item based on the custom assumptions from the plurality of clients;
updating the plurality of general assumptions based on trends across the plurality of clients; and
generating a modified residual value curve for the item utilizing the plurality of general assumptions updated based on the trends across the plurality of clients.
2 . The method according to claim 1 , wherein the residual risk analysis system performs the iterative process at a predetermined time interval.
3 . The method according to claim 1 , wherein the residual risk analysis system performs the iterative process continuously over life of the item or over life of a portfolio containing the item.
4 . The method according to claim 1 , wherein the item is one of a plurality of physical assets in a client portfolio and wherein the residual risk analysis system performs the iterative process for each of the plurality of physical assets such that each item in the client portfolio has a corresponding residual value curve that is updated to accurately forecast residual values thereof throughout its lifetime.
5 . The method according to claim 1 , wherein the item represents a vehicle, wherein the microeconomic factors include a lease term for the vehicle, wherein the plurality of general assumptions includes a general assumption of the lease term, and wherein the custom assumptions from the plurality of clients include one or more adjustments to the general assumption of the lease term.
6 . The method according to claim 1 , further comprising:
defining a tolerable range based on the residual value curve, wherein analyzing the custom assumptions from the plurality of clients further comprises determining whether actual data in the custom assumptions is out of the tolerable range and, if the actual data in the custom assumptions is out of the tolerable range, recalculating the residual value curve for the item utilizing the actual data.
7 . The method according to claim 1 , further comprising:
the residual risk analysis system providing a scenario analysis tool to a user via a user interface running on a client device associated with the user.
8 . A residual risk analysis system, comprising:
one or more server machines having at least one processor and non-transitory computer memory including instructions translatable by the at least one processor to perform:
at an initial time point, determining a residual value curve representing forecasted values of an item over time as affected by a plurality of forecasting variables based on a plurality of general assumptions, the plurality of forecasting variables including
modifications that reflect any changes to the item,
macroeconomic factors nonspecific to any industry to which the item is associated,
microeconomic factors specific to an industry to which the item is associated,
depreciation representing a natural change in value occurring as the item is used over time,
competitive sets including all reasonable substitutes for the item, and
locality representing a valuation adjustment relative to a geographic location;
receiving, from a plurality of clients communicatively connected to the residual risk analysis system, configuration information for different scenarios, each of the different scenarios testing an impact on a forecasted value of a portfolio of physical assets, the configuration information for the different scenarios containing custom assumptions from the plurality of clients; and
subsequent to the initial time point, initiating and performing an iterative process of fine-tuning the residual value curve for the item, wherein the iterative process comprises:
analyzing the custom assumptions from the plurality of clients;
determining a trend for each of the plurality of general assumptions associated with the item based on the custom assumptions from the plurality of clients;
updating the plurality of general assumptions based on trends across the plurality of clients; and
generating a modified residual value curve for the item utilizing the plurality of general assumptions updated based on the trends across the plurality of clients.
9 . The residual risk analysis system of claim 8 , wherein the iterative process is performed at a predetermined time interval.
10 . The residual risk analysis system of claim 8 , wherein the iterative process is performed continuously over life of the item or over life of a portfolio containing the item.
11 . The residual risk analysis system of claim 8 , wherein the item is one of a plurality of physical assets in a client portfolio and wherein the iterative process is performed for each of the plurality of physical assets such that each item in the client portfolio has a corresponding residual value curve that is updated to accurately forecast residual values thereof throughout its lifetime.
12 . The residual risk analysis system of claim 8 , wherein the item represents a vehicle, wherein the microeconomic factors include a lease term for the vehicle, wherein the plurality of general assumptions includes a general assumption of the lease term, and wherein the custom assumptions from the plurality of clients include one or more adjustments to the general assumption of the lease term.
13 . The residual risk analysis system of claim 8 , wherein the instructions when translated further cause the residual risk analysis system to define a tolerable range based on the residual value curve, wherein analyzing the custom assumptions from the plurality of clients further comprises determining whether actual data in the custom assumptions is out of the tolerable range and, if the actual data in the custom assumptions is out of the tolerable range, recalculating the residual value curve for the item utilizing the actual data.
14 . The residual risk analysis system of claim 8 , further comprising a scenario analysis tool embodied on the non-transitory computer memory, wherein the instructions when translated further cause the residual risk analysis system to provide the scenario analysis tool to a user via a user interface running on a client device associated with the user.
15 . A computer program product comprising non-transitory computer memory including instructions translatable by at least one processor, the instructions when translated causing a residual risk analysis system embodied on one or more server machines to perform:
at an initial time point, determining a residual value curve representing forecasted values of an item over time as affected by a plurality of forecasting variables based on a plurality of general assumptions, the plurality of forecasting variables including
modifications that reflect any changes to the item,
macroeconomic factors nonspecific to any industry to which the item is associated,
microeconomic factors specific to an industry to which the item is associated,
depreciation representing a natural change in value occurring as the item is used over time,
competitive sets including all reasonable substitutes for the item, and
locality representing a valuation adjustment relative to a geographic location;
receiving, from a plurality of clients communicatively connected to the residual risk analysis system, configuration information for different scenarios, each of the different scenarios testing an impact on a forecasted value of a portfolio of physical assets, the configuration information for the different scenarios containing custom assumptions from the plurality of clients; and
subsequent to the initial time point, initiating and performing an iterative process of fine-tuning the residual value curve for the item, wherein the iterative process comprises:
analyzing the custom assumptions from the plurality of clients;
determining a trend for each of the plurality of general assumptions associated with the item based on the custom assumptions from the plurality of clients;
updating the plurality of general assumptions based on trends across the plurality of clients; and
generating a modified residual value curve for the item utilizing the plurality of general assumptions updated based on the trends across the plurality of clients.
16 . The computer program product of claim 15 , wherein the iterative process is performed at a predetermined time interval.
17 . The computer program product of claim 15 , wherein the iterative process is performed continuously over life of the item or over life of a portfolio containing the item.
18 . The computer program product of claim 15 , wherein the item is one of a plurality of physical assets in a client portfolio and wherein the iterative process is performed for each of the plurality of physical assets such that each item in the client portfolio has a corresponding residual value curve that is updated to accurately forecast residual values thereof throughout its lifetime.
19 . The computer program product of claim 15 , wherein the item represents a vehicle, wherein the microeconomic factors include a lease term for the vehicle, wherein the plurality of general assumptions includes a general assumption of the lease term, and wherein the custom assumptions from the plurality of clients include one or more adjustments to the general assumption of the lease term.
20 . The computer program product of claim 15 , wherein the instructions when translated further cause the residual risk analysis system to define a tolerable range based on the residual value curve, wherein analyzing the custom assumptions from the plurality of clients further comprises determining whether actual data in the custom assumptions is out of the tolerable range and, if the actual data in the custom assumptions is out of the tolerable range, recalculating the residual value curve for the item utilizing the actual data.
21 . The computer program product of claim 15 , wherein the instructions when translated further cause the residual risk analysis system to provide a scenario analysis tool to a user via a user interface running on a client device associated with the user.