Managing Micro Risks

James Taylor on the Predictive Analytics World conference: “Eric Siegel opened with a view of using predictive analytics in enterprise risk management. Eric began by giving some examples of ‘macro’ risk – single, catastrophic risk events. But his focus, and the focus of predictive analytics, is on ‘micro’ risk. These are risk decisions focused on a single customer, a single claim, a single loan. Examples include the risk of a customer becoming a loss by making a claim, leaving your customer base, failing to make payments on a loan. Only if these risks can be exposed, seen, can they be managed. …Risk management (must) focus on aggregated micro risks not just headline risks.”