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particular the reporting of the valuation to end users. While Carsberg uses the terms
uncertainty it is in effect referring to risk, which is identified as a normal market
feature that varies by type of property and market location. The report accepts that all
valuations are an estimate appropriate to the valuation definition and that courts and
tribunals across the world recognise the risk as attaching to this figure. Carsberg
supports the Red Book requirement for the valuer to report a single figure of value
rather than a range but at the same time, if it is material to the client, reporting on the
risk attaching to this figure. Analysis of legal cases indicates that a margin of error
exists within which the valuation can vary without being considered negligent.
As risk is present in all valuations it must therefore be managed. The issue arises as
to how the risk is communicated to the client. Carsberg identifies the complexity of this
issue drawing from an earlier debate in the Mallinson Committee in 1994. The report
emphasises the need for more acceptable methods of expressing risk, particularly when
pricing in thin markets. To this end recommendation 15 of the report exhorts that
professional bodies representing both valuers and end users should agree an
acceptable methodology for reporting risk within the valuation, which can be readily
communicated to third parties. It is stressed that the methodology adopted must
enhance the decision-making process and not confuse end users. In reality the failure to
set risk within a proper theoretical framework which distinguishes it from uncertainty
is likely to be more confusing to both valuers and clients. While quantitative
techniques have been taught for a long time in property courses valuers still appear to
be reluctant to utilise and report statistical measures of risk. In these circumstances the
authors of this paper argue that a new approach is required. This paper now presents
an alternative paradigm for the reporting of risk based on techniques utilised within
business applications. In particular it applies a standard credit rating technique, based
upon the D&B model, to the determination of risk within property pricing – property
risk scoring (PRS).
3. The D&B model
D&B UK Ltd are a wholly owned subsidiary of D&B Corp. and are the largest
commercial rating company in the UK. In 2001, the D&B UK database held records of
3.2 m active businesses and dormant companies. In producing their ratings and credit
recommendations D&B rely on a wide range of data sources to inform their
decision-making. These are summarised in Table I.
D&B produce a financial strength rating and a risk indicator for every business that
is trading in the UK. The ratings may be solicited or unsolicited. The main difference is

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