Can Businesses Measure their Risks? Can these Risks be Managed?



All businesses have some level of risk. Whether it be customers who do not pay their credit or customers who stop buying from them.

Can risk be measured? Risk of course, has a level of uncertainty attached to it, and may seem difficult to measure.  Many people find it difficult to believe that Risk can be measured.

Risk can be measured. We are fortunate, in today’s times, with advanced technology and historical data, we can use data to recognize historical cases that put businesses at risk. Exploratory Data Analysis and techniques such as Machine Learning can help businesses to identify patterns in the data that are associated with Risk. Using statistical significance testing we are able to identify which factors scientifically contribute to the risk under study.

Of course, not all cases will be identified as ‘Risk’ but some cases will have a higher probability of risk than other cases. This means that a business would need to have a strategy in place to manage the different levels of risk. Some “Risks” are “critical” and need urgent response and action, while other “Risk” are important but less urgent.

In the case where your business provides credit to customers, it is important to identify which customers are highly not likely to pay their loan and the size of their loan. As some customers will have a loan size of $1000 with a probability of 90% chance of not paying back the loan. Another customer may have a loan size of $10 Million with a probability of 60% chance of not paying back the loan. Businesses often forget to look at the loan size and only focus on the probability of someone being a credit risk, when in fact, the higher loan amount is most times more critical that it be paid back than the smaller loan sizes. Businesses need to have different risk minimization strategies based on “Size of Loan” and “Probability of Credit Risk”.

When Businesses have a Strategy for Risk Minimization, they can integrate their credit data analysis results with their risk minimization strategy and automate it into a complete decision support system for their credit officers.

Fortunately, with the large volumes of data, businesses can use machine learning techniques to crunch customer transactional, demographic, social media, and lifestyle data, etc to score customers faster and smarter giving businesses the enhanced customer experience and competitive edge in decision making.

Are you Making Good Use of your Data?




Every business has lots of data…the question that needs to be answered is, “Are you making good use of your organisation’s data?

The best way to make good use of your organisation’s data is to use it to solve the business problems of today. When there is a business problem, brainstorm and understand what could be causing this problem…and then identify the relevant business data that can help provide insights & solve the problem.

Extract the relevant data a, perform Data Visualization to better understand when the problem is occurring, which location, for which products, which customers are being affected, etc and then measure and compare the insights , using appropriate analytical techniques such as Descriptive Statistics, Hypothesis Testing, Correlation Analysis, Regression Analysis, etc to help solve the business problem.

Evaluate the analytical results and validate that the solution is accurate and meaningful. Then take action, this is the most important step…TAKE ACTION and monitor and manage the results of your action. The last and final step is to demonstrate and communicate the analytical value to your organization. Whether it be a Reduction in Costs, Increase in Revenue, or Reduction in Time, these are essential communication messages for the Business Operations and Strategy Team to understand how Business Analytics can help solve business problems using a data driven strategy.

If you would like to learn more or are interested in projects like the one described above, contact us at Business Data Analytics Solutions Pty Ltd at






7 Items your Business Needs to consider, to Influence Customer Buying Behaviour?

People – Process – Data – Domain Knowledge – Technology – Analytics – Plan

The above 7 items is all you need. But I would like to start off by saying that:

“Every Business is unique! Every business has its own leadership, Culture, Products, Pricing, Marketing, Customers, Technology, Processes, Analytics”.

It therefore makes sense to acknowledge that every business has it’s own needs, it’s own business questions that need to be answered at any specific point in time. Questions such as Which of our customers are buying product A, How can we increase our number of customers by 20%, How do most of our customers buy from us, What is the customer process for buying our products, When can we expect our customers to change their buying behaviour, How can we reduce churn?

Your data can answer all these questions. You may have several sources of data such as

  • Descriptive – demographic, geographic,
  • Attitudinal – preferences, needs,
  • Interaction – Email, web, call centres
  • Behavioural – transactions, payment history, usage
  • Website Activity – Number of customers, Number of conversions,
  • Social Media – Positive Sentiments versus Negative Sentiments

To influence your customer behaviour, that is, to get customers to do what you want them to do, your business needs the right People, the right Processes and the right Plan in place. Talking to your business domain experts and then taking the relevant data necessary to answer your business question through the use of technology and tools such as SPSS, SAS, R, etc businesses can uncover key insights that will greatly assist them with proactive decision making and business strategy.

Now, what do I mean by the right People? The right people refers to the right employees and the right customers. Having the right employees, means that your business must have the right talent who have enough experience in the industry and with your products as well as the right analytic skill set to better understand the data and how to derive business insights from it.

Having the right customers, means that your business understands exactly who are their target customers, what they like, what they dislike, what they perceive as being most important and what are their current needs.

Having the Right Processes in place, is all about having processes in place at each of the customer touch points where by your business can engage or incentivise your customers to buy your product or service and integrate all the data from a single customer as a single view. This is where the power of the analytics lie. By integrating all you know about your customers into one file, you are able to determine relationships between different customer activities that allow you to make offers or to the right customer, at the right time with the right product offer using the right channel.

What about the Right Plan. How does your ensure that they have the Right Plan? I wold say, it all about the 7 items that your business needs to consider and taking each of them into account, your analyst will have enough information to decide how best to answer the business questions. Based on the business question, your analyst will identify the best statistical techniques and tools that need to be used to provide your business with accurate and reliable results to strategy and proactive decide on what is the best approach to successfully achieve the business goal.

Please share any questions you may have at this point…I will follow on from here next time with some common business questions and the statistical technique and approach that may be used.