European Commission Picks FactSet for Risk Data

The European Commission (EC) has purchased three FactSet data feeds to better understand risks linked to global supply chains.

An EU official says the new data feeds “could contribute to a better grasp and understanding of economic links and developments at the micro and sectoral level.”

It is not yet clear if the data will be useful in informing European policy, as the EC is still “assessing FactSet’s datasets,” the official adds, but “the more our [regulatory] proposals are based on real evidence, the better targeted they will be.”

“The commission will in principle use the database to better understand supply chains in the European single market, but other uses cannot be excluded at this early stage,” the official says.

The three datasets are FactSet’s Supply Chain Relationships data, its Geographic Revenue data (Georev), and the Revere Business Industry Classification System (RBICS). The Supply Chain Relationships dataset tracks interactions between global supply chains, pinpointing customers, suppliers, and company competitors. Georev provides insight into firms’ exposures to countries affected by geopolitical, macroeconomic, and market threats. RBICS offers a granular view of companies’ revenues based on their assets, products, and services.

The EC began planning to acquire new supply chain datasets from a data vendor at the beginning of the year, and discussions with FactSet began in February. Those conversations were accelerated by the Coronavirus outbreak, and a call for tender was launched in mid-April. Shortly after, the EC agreed to partner with FactSet.

“We started thinking about the need to better map and trace supply and value chains in the single market early in 2020, before the pandemic,” the EC official says. “Obviously, the crisis confirmed the interest in mapping firms’ economic production linkages.”

Boryana Racheva-Iotova, head of risk at FactSet, says that the Covid-19 crisis has disrupted financial organizations’ view of company risk exposure. She says the pandemic caused “a dislocation of exposure”, meaning that it is difficult to map global events or risks to an exact company or product.

“[This dislocation] made a lot of the risk models unusable, and one of the reasons those dislocations happened was because of disruption to supply chains. This is something our clients are looking to remedy by using the global supply chain data, Georev and RBICS,” Racheva-Iotova says.

The data will be delivered in table format directly to the EC’s SQL database via a standard data feed.

The authority already pulls in feeds from other providers, and takes some data directly from corporates themselves. In the short term, the EC does not intend to acquire any other datasets or services from FactSet, says the EC official, but that this could change as it “gets a better assessment of FactSet possibilities”.