Whether for an individual project or for an ongoing engagement, we organize historical performance measurements, assemble an analytic strategy, compile hard data, break the problem down into manageable chunks, develop predictive models & scorecards, forecast trends, identify uncertainties, and assign the ideal strategies to maximize performance.
Here’s an example of a project we completed in 2008. A credit card-issuing client wanted to assign credit lines to customer accounts in a way that balances the risk of account default with the potential of strong credit line utilization and finance charge income generation. In this engagement:
- We developed predictive scorecards to project likely income and risk by account for each line amount the issuer planned on assigning.
- With our client, we jointly developed rules tied to account segments that mirrored the client’s credit policies, specifically:
- a maximum eligible credit line for more risky accounts,
- a series of limits on portfolio-level average line amounts and interest rates, and
- limits on the maximum allowable credit exposure and at-risk default volume.
- We then compared results of alternative strategies and their financial trade-offs, and in the end we assigned to each account the ideal credit line that balances the strategic objective, measured as risk-weighted net income.
More examples of engagements like this one, and their results, are described on the Case Studies section of our site.