University of Southern California Behavior Score to Minimize the CLR Discussion

Homework 4: Design a process to improve this.

Problem Statement: – Design a solution procedure to build a better behavior score – Right now they do this: Use internal behavioral data Build a logistic regression binary classification score Define bad as 90 days delinquent anytime over the next 6 months Maximize the score KS Sort by the score, sum the losses and purchases amounts for the lowest (safest) 70% accounts – Calculate the CLR (sum of losses / sum of purchases) at 70%. The goal is to minimize this CLR at 70%. Requirements: Here are three examples (see attached files) of pretty good submissions for homeworks. It’s best if you begin by stating what the business problem is, in your own words, so it’s clear to the reader that you understand the problem. Then describe the proposed solution approach. If appropriate, you can also describe any assumptions you made, particularly about data that is needed. You might describe several solution paths depending on what data might be available. Four parts: the problem statement, the solution, the data needed (your assumptions), and the action plan The goal is for the reader to read it, easily understand it, and believe it will work well to solve the problem. It’s not enough to have a great idea – you also need to communicate it well.