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Risk Quantification for Branch Management (302959)

Keywords: HMM, risk quantification, risk management

As a data scientist of an auditing firm, one of my main jobs is to quantify risks so our auditors can decide the priority of their auditing process, which will effectively save them time. In a set of accounting journals, each transaction may be characterized by triple factors: a sales person, client, and sales product. Defining a negative profit (loss) as our risk here and using real business data, we first try to measure the risk of each factor via traditional probability modeling techniques. Then, we measure the risk of each pair of such factors that may or may not be independent. Finally, short-term prediction of such risk measure is explored via statistical methods. Such risk measure also can be applied to business analytics, especially branch management. The management of our clients shows a strong need to compare and grasp the risk status of their branches from data. By redefining the risk according to the data set at hand, such risk quantification can be applied simply to help spot potential danger.