APRA, ASIC, shareholders and the wider industry couldn’t see HIH teetering on the brink of disaster at the start of last year, but a corporate credit rating agency says it could have. Rapid Ratings told the HIH Royal Commission that it could have predicted the collapse “well before the warning signs were obvious to others” – in fact, as early as 1996.

MD Patrick Caragata said in a submission that his scientifically derived “business early warning system” includes bankruptcy prediction software that offers regulators and the market “a scientific basis from which to identify what the early warning signs were”.

“There are always early warning signs of business failure and people tend to ignore these signs because of false assumptions, poor observation skills and paradigm blindness,” he said. “The royal commission must assess why warning signs of business failure were ignored.”