credit risk/ the value of the business

hanaabdalrahman

hello.. can you send me  some references  for the calculation of earn and lose money, i search about it but i get for some performance measures like ACC and error and others    thanks

kypexin

I will duplicate my answer from personal message here, so may be it is useful for someone else. 

 

There's not that much universal recipes out there, as such a calculation is very business-specific. 

 

I can highly recommend you this book first: https://www.amazon.com/Data-Science-Business-Data-Analytic-Thinking/dp/1449361323 which is the best source on the topic of cost-centered approach to ML.

 

You can also have a look at couple of my presentations and a webinar where I have evaluated a real life example of cost calculation:

1) http://whatthefraud.wtf/2018-tula-labs-open-day/

2) http://whatthefraud.wtf/selling-data-science/

 

At the end, the most important thing underlying is how much a correct and incorrect prediction do cost for your business. Depending on an industry and a business model, this calculation might be either simple and straightforward, or arbitrary complex. 

 

Specifically, for credit risk you have to answer this simple questions: 

1) How much do I lose if a customer granted X amount of money do not pay it back?

2) Hom much do I lose if I reject a loan applikcation to a good customer?

3) How much do I earn if I give a loan of amount of X to a good customer and he pays it back? 

sgenzer

hello @hanaabdalrahman - I'm sorry but your question is not able to be answered as written. Can you please provide more information as per the posting instructions: 

 

https://community.rapidminer.com/t5/Getting-Started-Knowledge-Base/READ-ME-HOW-TO-POST-QUESTIONS-ON-THE-RAPIDMINER-USER-COMMUNITY/ta-p/49485

 

Thank you.