Industry risks in times of Covid-19
While the coronavirus spreads around the world, governments are attempting to reduce contagion rates at the expense of negative economic effects. Market expectations have plummeted, foreshadowing the risk of a global economic crisis and mass unemployment. Governments provide huge financial aid programmes to mitigate the expected economic shocks. To achieve higher effectiveness with cyclical and fiscal policy measures, it is key to identify the industries that are suffering the most from the unfolding economic crisis.
We introduce the CoRisk-Index. It is the first economic indicator of industry-specific risk assessments related to Covid-19.
Currently, we offer these visualisations:
- The CoRisk-Index : A compound measure of risk perceptions per industry over time.
- Text Sentiment: The share of negative words in Corona-related sentences and the overall reports.
- Industry View: The share of firms reporting corona-related risk factors.
- Topic Heatmap: Sentences mentioning risk-topics, per 1.000 corona-related sentences (based on relevant keywords).
Explore the different visualisations on the upper tab to see how different industries perceive business risks related Covid-19. Select specific industries on the right-hand panel and feel free to download the index data as a csv-file.
The CoRisk index is currently work in progress.
The index requires constant revision as the Covid-19 pandemic unfolds. We are regularly retrieving new information from businesses to keep the CoRisk-Index updated and accurate. Additionally, we are working on the integration of macroeconomic indicators, such as unemployment data, in the near future.
For questions and feedback, feel free to reach out to us.
About the CoRisk-Index
The CoRisk-Index is a data-mining approach to measure the industry-specific risks perceptions related to Covid-19. We examine company risk reports filed to the U.S. Securities and Exchange Commission (SEC). This data allows for a real-time analysis of risk assessments. Preliminary findings show that the companies’ awareness towards corona-related business risks is ahead of the overall stock market developments by weeks. The risk reports differ substantially between industries, both in magnitude and in nature. Based on natural language processing techniques, we identify corona-related risk topics and their perceived relevance for different industries. The approach allows to distinguish the industries by their reported risk awareness towards Covid-19.
Read more about the methodology behind the CoRisk-Index here.
The CoRisk-Index in the media
The CoRisk-Index has been featured in:
- Freiheit+ Streitbar Podcast (de) (27.05.2020)
- Washington Post (30 April 2020)
- Oxford University News (30 April 2020)
- Oxford Internet Institute Blog (24 April 2020)
- Die Wirtschaftswoche (de) (03 April 2020)
Furthermore, the CoRisk-Index was presented in seminars and webinars at:
- Oxford Institute for New Economic Thinking, June 2020
- Etla Research Institute of the Finnish Economy, June 2020
- Oxford Department of International Development (from min 25:30), May 2020
- UNDP Eurasia Webinar Series, May 2020
- Hertie School of Governance Berlin (Data Science Lab), April 2020
- German Institute for Economic Research (DIW Berlin), April 2020
The CoRisk Paper
The development of the CoRisk-Index is described in a working paper:
About the authors of the CoRisk Paper
The CoRisk paper is a collaboration of researchers based in Oxford and Berlin, including researchers from institutions like the Oxford Internet Institute (University of Oxford), Saïd Business School (University of Oxford), Centre for Digital Governance/Data Science Lab (Hertie School Berlin), and Humboldt Institute for Internet and Society:
CoRisk Sentiment and Stock Market development
Preliminary findings suggest that the text sentiment of corona-related sentences in the business reports pre-empt overall stock market developments.
Around mid February, global stock markets started to decline rapidly (Panel B: blue line), as it became evident that the COVID-19 pandemic would have far-reaching economic consequences. In comparison, the “negativity” of the risk reports (Panel A: red line) increased already prior to this development (Panel C). The text sentiment of the corona-related sentences leads stock market by around five days (Panel D) with a correlation of -0.7.