My company is replacing several of its scoring models and adjusting its strategies by using the predicted outcomes by score range. When we have introduced new models to existing strategies in the past, we have used a tracking delay. Is there a way to introduce the new models without a tracking delay? Perhaps, there is some kind of adaptive control process for predictive models?
You’re one smart cookie asking about adaptive control processes. Bear with me while I explain the basics of adaptive control to my readers who have no idea what you’re talking about. Adaptive control is a systematic approach for controls to automatically adjust in real time to maintain a desired level of performance when certain parameters are unknown or change over time. Clear as mud, right? I didn’t think so.
So, here’s what Melanie is asking for. She wants her scoring models to adjust on the fly. As her company receives data about how its credit portfolio is performing within each scoring range, Melanie wants more than real-time feedback that can be analyzed for the purpose of making manual adjustments. Girlfriend wants the sun, the moon, and the stars. She’s asking for a mechanism that not only analyzes the real-time feedback but automatically adjusts the scoring models.
Now, back to answering the question. I’m all for dreaming, but what you’re asking for is a tall order. While it may exist, it may be expensive not to mention difficult to implement.
Here’s what I recommend instead. You have the reasons specific score breaks were selected if you have the background on your current strategies design. These elements would be available from the new scoring model development assuming you selected them based upon projected risk levels and the number of accounts likely to score in each range. Therefore, you should be able to calibrate your new models into your existing strategies fairly easy.
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