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    Five must-haves for an agile credit risk modeling platform

    When a strong wind gusts, only the trees that can bend won’t break. Your credit risk model is the same - if it won’t be able to rapidly change, you might as well be looking at a crystal ball. Chances are, your model is not updated yet with the most current data. Why? Because updating most credit risk platforms is a laborious task that takes a very long time. Lots of red tape, regulations, forms and people are involved. This is never optimal - a model starts to deteriorate the moment you begin using it - but in this whirlwind of a market this is a real problem for lenders. The percent of errors increase, leading to an increase in default rate and clean rejects.  Is your credit modeling platform agile? Right now, the winds are strong, so take note: Here are five things you should look for in a credit risk platform that will help you stay agile, and profitable. A (mostly) no-code approach Models can be developed in [...]

    By | April 12th, 2020|General|0 Comments

    Five ways to effectively use segmentation in credit risk modeling

    Back in the 16th century, retailers offered different sales channels and products to customers of different economic classes. Evidence of segmentation can even be traced to the Bronze Age, when merchants segmented their markets based on geography. Today, this age-old concept is more important than ever, especially for those working in credit management. The assumptions credit risk professionals made up until now might not be relevant anymore, and the way they look at their customers needs to change accordingly. Key steps to an effective segmentation Here are five new ways to look at your customer base, and prospects, to ensure you’re properly managing your risk and, at the same time, not leaving money on the table. Run mini-models in parallel to help you achieve optimal results. The Covid-19 crisis will impact customers’ financial stability in various ways. Thus, a more granular segmentation will yield more accurate results. Ensure your risk modeling platform allows you to run these in sync so you make the most out of this micro segmentation approach. [...]

    By | April 12th, 2020|General|0 Comments

    Guest blog: Weight of Evidence, Information Value, and Population Stability Index: Background and implementation notes

    [latexpage] We are thrilled to have a guest post in our blog by Dr. Hershel Safer. Dr.Safer is an expert in taking the most advanced mathematics, statistics and machine learning techniques and generating the most robust credit risk models possible. Through many years of experience in research and development of models, Dr.Safer has developed a set of guidelines which prove essential when developing new credit risk models. In this guest blog post, we'd like to share his cookbook for the development of some of the most basic functions used in modelling: Weight of Evidence (WOE), Information Value (IV) and PSI (Population Stability Index). Introduction In credit risk modelling, as in other fields where a predictive model is built based on raw historical data, preparing the data for the training is the most crucial stage in the creation of a strong model. The statistical nature of many raw features is often not perfectly aligned with the requirements of various training algorithms and may result in inferior models. Thus, preparing the data [...]

    By | April 10th, 2020|General|0 Comments

    Post-Covid19 credit risk modeling and thirsty crows: Preparing for the day after

    An old folktale tells the story of a thirsty crow, who found water at the bottom of a bucket, and couldn’t reach it with the tip of his beak. He added pebbles to the bucket until the water level rose enough that he could drink. Necessity has always been the mother of invention.The world will change. It already has. It will leave everyone bruised in some way, and everyone will have to deal with new challenges, or with old ones with a twist. Doing post-Covid19 credit risk things the “pre-Corona” way just won’t cut it. If you’re a credit risk professional, you’ll see an upsurge in demand for credit, and you’ll need to ensure you’re able to assess risk in a way that matches the new world conditions.  Why your “beak” alone won’t cut it:  You will have to make tough decisions, like never before. Well, maybe not “never”, but probably not since the 2008 crisis. With many more credit seekers, you’ll need to be extra-certain that you are taking [...]

    By | March 31st, 2020|General|0 Comments


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