Building a rule based credit risk assessment expert system Research Paper

Building a rule based credit risk assessment expert system - Research Paper Example In most cases, statistical preventive analytical techniques are used to analyze and determine credit risk levels associated with loans and credits given to borrowers. Therefore, the significance of credit risk assessment is to reduce credit or loan defaulters. Adequate information about the credit users are often for the analysis of credit risk levels. This information is usually obtained from internal credit scoring systems. This system allows computation of personal information credit scores from credit reports (Camp 14). Such information is provided for by rating agencies or external credit bureaus. Notably, the credit scores often indicate an individual or organizations’ current and historical financial situation. These financial reports are then used to analyzing credit risk levels thereby determine credit defaulters (Grzymala-Busse 71). However, the internal credit scoring techniques do not define defective or ineffective score. Therefore, it does not predict the actual levels of risk associated with lending a person. The shortcomings of the internal credit scoring methods have been solved by the use of the Profiling risky credit segments. This method is tremendously significant in assessing credit risk levels. It applies The Pareto principle that suggests that the majority (eighty to ninety percent) of the credit defaulters emanate from lower (ten to twenty percent) lending segments. Therefore, segment profiling usually provide vital information for credit risk analysis. In this analysis, Credit providers usually collect vast credit information or data of the credit users (Graham and Milne 38). Numerical and categorical data concerning the credit users are collected. Since the collected information is never synchronized, it is often considered noisy or insufficient. Therefore, profiling facilitates the identification of variables or

Analysis the case Assignment Example | Topics and Well Written Essays - 750 words - 1

Analysis the case - Assignment Example Getting new workers requires the company to advertise for positions, interview candidates and also train successful candidates in the business of the organization. It would be less costly to the organization if a manager talked to the incumbent workers about what deliverables the company expects and how to improve their performance to meet the targets. Shaer explains that reprimanding employees regarding their performance may erode their morale and ego (27). Managers must thus navigate these scenarios in a professional manner. Counselling is one of the ways that managers can â€Å"fix† underperforming workers. However, they have to consider several issues so as to maintain the integrity of the results of the exercise. While counselling workers, managers must assure employees that they are an important part of the organization and that their performance is acceptable. The point means that managers should approach the issue as a mere act of enabling an employee reach the optimal performance to avoid demoralizing workers. Managers must be willing to go extra miles to ensure that employees benefit from counselling (28). They must also offer support and understanding as the employees try to adjust to the changes. The workers need to know the importance of the exercise and an assurance of support in the process. The managers should explain to the employee the nature of the exercise, the areas they need to improve, and the period that they are required to make the changes. The workers need to understand the consequences of not adapting to the new conditions. All these aspects must be outlined with absolute clarity (27). Acceptance with a â€Å"but† is a common response. Employees admit that they may not be performing in one area, but claim to contribute more in other sectors in the organization (Shaer 23). The claims are often unsubstantiated and may not be measurable. Thus, they cannot be used to show the performance of