There are numerous strategic risk issues that might keep a chief risk officer or chief executive officer awake at night. Particularly since the financial meltdown, many are asking themselves (and anyone who will listen), “Do we need to do more in risk management?”

Evaluating your program is an intense process, but you can start with some basic information. These questions, taken from The new risk era: Capturing the whole picture, are a wonderful exercise to help you evaluate your risk management strategy. Take a moment to honestly gauge your organization’s efforts surrounding risk management.

If you can answer “No” to any of the following questions, your organization can benefit from establishing a formal enterprise risk management approach or reevaluating its existing framework:

• Are your risk and compliance requirements properly integrated with your business priorities?
• Is your risk management process aligned with your strategic decision-making process and existing performance measures?
• Is your risk framework properly calibrated to recent market developments?
• Does your current risk framework drive timely, top-notch decision making?
• Can you proactively analyze the changes in exposures to your financial performance?
• Is your risk management process coordinated and consistent across the entire enterprise? Does everyone use the same definition of risk?
• Is risk data accessible to anyone who needs to see it, in a form they need to see, when they need to see it?
• Are you ahead of your competitors in meeting regulatory expectations about firmwide risk reporting and monitoring?

With these questions answered, you've developed a roadmap that you and your team can follow to begin the education process. David Rogers, SAS' Global Product Marketing Manager in Risk, gives three recommendations to deploy an enterprise risk management program: 1.) Embed risk management as part of your organizational culture; 2.) Integrate a governance, risk and compliance program; and 3.) Immerse yourself in the evolving world of risk. As a first step toward immersing yourself in the evolving world of risk - take a look at the thought leadership articles and examples on the Risk Management Knowledge Exchange.

Self-reliant business users would like to use analytics more often to address changing market conditions and make quick decisions. Take, for example, a marketer or customer support specialist who might want to generate analytics and apply results to a variety of business issues, including:

• Determine which inbound customer interactions are best candidates for an up-sell or cross-sell or a retention offer.
• Recognize which customers are likely to respond and include them in the new campaign.
• Measure the propensity for an active customer to churn.

Should that marketer have to rely on statisticians, modelers or data mining specialists to create predictive models every time? Are they frustrated because they have to wait for answers? Do they have to apply above issues to hundreds of product or service offerings? You bet! On the other hand, business analysts often do not understand all aspects of data mining and statistics.
Continue reading "Self-service predictive analytics is here. Are you ready?"

Earlier this week I read an interesting article about how the UK operation of Zurich Insurance have been fined £2.27m by the Financial Services Authority (FSA) for losing the personal details of 46,000 customers. Specifically, two points from this article grabbed my attention. First of all, on a positive note, was the seriousness that the UK’s Financial Services Authority (FSA) has taken in tackling this problem. Secondly, on a negative note, the most astonishing thing about this incident, which happened in August 2008, was that Zurich Insurance were oblivious to the data loss until a year later!

Today, one of the greatest risk exposures that insurers face is the security of personally identifiable information (PII) of policyholders and applicants. Technology has played a major role in this, as the Internet, high-speed networks, mobile computing and better information sharing have made PII more vulnerable to unauthorized access while also becoming more valuable to criminals.

PII data breaches can have a huge negative impact on a company’s bottom line. As well as regulatory fines, it is estimated that the financial impact of a PII data breach of a nominal 5,000 records could range from $450,000 to more than $1.5 million. In addition to financial losses, there’s also the risk of a damaged business reputation, which can lead to fewer cross-sell/up-sell opportunities and even to a loss of policyholders.
Continue reading "Fixing a hole – Securing personal information."

Recently, I had the privilege of visiting one of our small to midsize business (SMB) customers, Oberweis Dairy, a family owned, 90-year-old business located in the Chicago area. Essentially, Oberweis has morphed from a family dairy farm to a significant, regional food manufacturer and retailer.

With 39 retail stores, 40,000 home delivery customers and many wholesale local and chain grocery customers, the Oberweis operation today probably isn’t what Peter Oberweis envisioned when he started selling excess milk to neighbors in 1915. It is a sophisticated business that is growing, with plans to grow even more. To that end, Oberweis has used SAS Analytics, under the leadership of Dr. Bruce Bedford, to identify and correct manufacturing issues, mine customer complaint data and root out bottle return fraud.

Driving away from their factory, I couldn’t help but think of a recent business analytics white paper from UBM TechWeb and sponsored by SAS. The paper details survey results of 800 leaders at small- to mid-sized businesses. We comissioned the survey to better understand the use of analytics in the SMB market. Quite simply, we wanted to know how many SMBs are employing analytics in their normal course of business, and if not - why? And when they might plan to use analytics?

The survey asked many questions about how SMBs are using analytics, and what they thought was preventing them from employing analytics in their businesses. Many SMBs interviewed thought that it would be nice to have analytics deployed but didn’t think they could afford them. In fact, 50 percent of the respondents thought their businesses were too small for “big-enterprise” solutions and 24 percent said they would buy an analytical solution if they could afford it and understand the value it delivered. (Click image to see details.)
Continue reading "Do cows need analytics too?"

Every day I see news reports of financial organizations and consumers falling victim to yet another payment fraud scheme. Whether it is through a card, wire, online banking or another channel, fraudsters are becoming much more savvy in the way they attack.

Financial organizations need to rethink their arsenal of technologies that have become outdated and switch to more modern techniques that keep up with the strategies of today's fraudsters. As I interview our clients and talk to experts in the field, it has become more apparent to me that they need enhanced processes and technologies to become more proactive in their detection of fraud.

Check out this customer video that shows how one global organization is reshaping their approach to tackling fraud before it happens, using real time analysis and alert detection capabilities that extend across the enterprise. HSBC has implemented a true enterprise fraud platform.

You'll catch a glimpse of some innovative techniques that can provide:

• Real-time scoring of 100% of all transactions.
  
• Unique customer signature files that allow models to detect pattern changes in customer behavior that may indicate a fraudulent activity.
  
• Multiple analytical approaches including fraud network analysis for detecting the most sophisticated crimes rings.
  
• Integrated case management capabilities for managing multiple alerts from multiple fraud systems.
  
• Dashboard reporting for communicating results such as operational efficiencies, more effective resource utilization, improved false positive ratios, and fraud reduction.

Even, if you're not in banking, it's worth thinking about how you can apply these same concepts in your organization to deter fraudsters. We've also seen great fraud detection successes from insurance companies and government agencies.

As promised in my last post, SAS’ Greg Soussloff, Dan Crane, Lori Schafer, and James Vickers are back from the National Retail Federation’s tech conference, NRF Tech. Here’s what they learned and shared at the SAS Roundtable on Social Media and Merchandise Planning.

The well-attended roundtable included IT executives from Charming Shoppes, Restoration Hardware, and Hastings Entertainment, as well as strong representation from industry analysts, vendors and consultants interested in this exciting new area.

“The three retailers all talked about their involvement in social media with Facebook sites and Twitter accounts,” Soussloff reports. “Charming Shoppes also discussed its dedicated social media staff and online community Sonsi.com, which sells fashion merchandise from over 80 brands and provides opportunities for social networking, live chat sessions, interactive polls and advice.” (I found Three ways to not lose your keys advice especially helpful.)

“Restoration Hardware and Hastings currently use social media to help define marketing strategies,” says Crane. “They’re looking online for input that helps create meaningful product stories for their stores, websites and catalogs -- and for feedback that could lead to product improvements.”

So, what are “haulers”?
“Haulers,” explains Vickers, “are typically young women who go on shopping sprees and return with ‘hauls’ of merchandise. Once home, they try on their haul, creating videos to share with a loyal community of friends and others who judge their outfits, style and fashion sense.” Haulers frequently post their videos online. What better marketing could a retailer have than a happy customer proudly displaying her purchases on the Internet? Companies like Wet Seal and JCPenney have a hauler following that can be found on YouTube.
Continue reading "Haulers, influencers and customer-created outfits: analytics tie social media to merchandising"

Tough market conditions and a sluggish economy have made manufacturers focus even more on supply chain costs. Per an IDC survey earlier in the year of 400+ manufacturers and about 180 retailers “reducing procurement, production, transportation, and logistics costs” came out to be the number one priority.

But cutting costs without understanding their impact on long-term profitability can be suicidal – imagine switching suppliers just based on price, without much insight into new supplier’s reliability, quality, or how important you are to that supplier’s viability. Remember Mattel’s sourcing woes?

So how can manufacturers cut supply chain costs while staying true to their long term objectives of quality and profitability?
Continue reading "Supply chain analytics 101"

Many years ago, when I was growing up my father tried to give me some career advice and suggested I consider working in the telecommunication industry. Unfortunately, his advice fell on deaf ears and I ended up working for an insurance carrier. Never thinking the twine shall meet - until now.

Insurance companies talk about new product development and speed to market, but true innovation is rare in the insurance sector. However, telematics could be one technology that may revolutionize the industry. Telematics refers to the use of wireless devices to transmit data in real time back to an organization. For insurance it is often used in the context of automobiles, whereby event data recording devices collect and transmit data on the vehicle location and usage, such as information on air bag deployments, how fast and distance traveled, and stolen vehicle locations through the use of GPS technology. The data recorded in the vehicle can then be used to develop more accurate pricing, improve granularity in risk management and reduce losses by better assessments of claims.

Studies have shown, obviously, that the number of crash related claims increase based on mileage driven. Consequently, research by the UK Government Road Casualties in 2008 proved that accident risk per mile on a motorway is 80 percent less than on other roads. This begs the question, what is risker? A urban driver doing only 5,000 miles per year or a regional sales manager who travels over 20,000 miles per year, but mostly on interstate highways? Hence telematics on its own will not revolutionize the industry. Rather, insurance companies need to use analytics to mine the vast amount of data that will be produced by these wireless devices. Using data mining techniques, insurers will be able to answer such questions and ultimately provide individually priced auto insurance based on a driver's past and forecasted driving behavior.

Continue reading "Driving in my car: How is telematics changing auto insurance?"

Cohesion (n): the act or state of sticking together tightly; molecular attraction by which the particles of a body are united throughout the mass.

Three is the number of years a snail can sleep. Three is the first odd prime number. Three is the third Fibonacci number that is unique. (I could do an entire blog on Fibonacci, but I’ll spare you the Dan Brown). The human ear has three semicircular canals and three ossicles. Most elbows consist of three bones, the only joint in the human body where three articulations are surrounded by one capsule.

Humans perceive white light as the mixture of the three additive primary hues: red, green and blue.
Continue reading "Einstein ... and the significance of the number 3"

It's webinar time again! This hour session is designed for business analysts, directors of analytics and BI, and business users on the topic of Centers of Excellence. This live "101" webinar will take place live on Aug. 18, and it's the fifth installment in the 2010 Applying Business Analytics Webinar Series.

Maximizing knowledge of your business intelligence and analytical resources is the most effective way to improve business performance and create a competitive advantage. Successful organizations do this by aligning their culture, technical capabilities and internal processes with their strategic and tactical business objectives and priorities.

Whether you are focusing on reporting and BI, data management or analytics, there is a role for a center of excellence in your organization. The webinar will demonstrate how centers of excellence can help you and your organization use existing resources to maximize business value.
Continue reading "Centers of Excellence 101: How to maximize knowledge from BI and analytical resources"

Continue reading "Fraud detection explained"

When I first started in the telecom business I worked for a guy named Charlie Snell. Charlie left General Motors after more than 20 years because he was fed-up.  Charlie would regale us at lunch with tales of an environment that stifled any creativity and innovation. This was 25 years ago. I loved cars as much as the next guy, but after a few of Charlie’s stories I was glad to be working in telecom.

Charlie was managing a network upgrade project.  We were upgrading our data links from 9,600 bits per second to 56,000 bits per second. My job was to configure the equipment then travel to remote sites and make sure these high-speed connections were working. Some people in the company objected to this extravagance – claiming that no one would ever need that much bandwidth.

In the 25 years since I worked for Charlie, the telecom industry has changed the world. Billions of people who had never made a phone call now have access to a cell phone. Most people I know have a multi-megabit Internet connection that costs less per month than a tank of gas and a high-speed wireless router that costs about the same as a couple of car washes.  The Blackberry and iPhone I carry in my pocket have more computing power than the data center did when I worked for Charlie. In addition to being great phones, they give me anywhere anytime access the whole world of information and entertainment.

Compare that to the auto industry. The two biggest innovations in 25 years have been windshield wipers that pause, and cup holders.
Continue reading "Profits at GM prove that telecom guys are smarter than car guys"

A new SAS Analytics Facebook page helps customers, prospects, partners and employees connect via a larger online community. As part of our efforts to reach out to customers and raise awareness about analytics, we created a SAS Analytics Facebook page, and it's ready for you to "like."




What's to "like"?
Whether you are at the listen, share or create stage in your own social media journey, the SAS Analytics Facebook page is a place for you to connect with those interested in analytics. We invite everyone to 'like' the page and start participating. You can ask a question, share news and information, and provide useful information for others through this new channel. Doing so makes the good things people are doing with analytics more visible, relevant and reliable.
Continue reading " Do you 'like' SAS Analytics? Show it now on Facebook"

What's going on? I am often asked this question about the insurance industry and even more so at this time of the year, as SAS prepares its sales forecasts and marketing budgets for next year and beyond. Of course I usually respond with the same answer: improving operational efficiency, reducing claims fraud, increasing customer retention, risk management and product pricing. With the conservative nature of insurance, realistically I could give the same top five issues for the next 10 years, if not longer.

However, if we peel back the covers there is a lot of changes going on in the insurance industry and the remainder of this article will briefly highlight some of the innovative initiatives that insurance organizations across the global are using today.
Continue reading "What’s going on? – Four initiatives changing the insurance industry"

Have you ever seen an image with two things that just don’t seem to go together? I had that experience last week on a train from London to Brussels. The woman next to me was reading a magazine and the image on the page just didn’t look right. I took me a while to convince myself that what I saw was real. Queen Elizabeth II was wearing a lab coat with a Research in Motion logo.

This was not one of those internet hoaxes that someone created using Photoshop. The Queen was really wearing a white lab coat with a nice big RIM emblazoned on it. On a recent state visit to Canada, Her Majesty paid a visit to Research in Motion. Of all the places in Canada, why did the Queen drop in on RIM, and allow herself to be photographed in a lab coat?

The Queen knows that we are in the midst of a technology revolution that is changing society, and RIM is only one of the smartphone leaders headquartered within the commonwealth. Now I don’t think RIM needs the Queen to help sell Blackberries, but it can’t hurt. I’ve had the pleasure of meeting several people from RIM and these people are smart.

Smartphones' advances in screens, processors, memory, and data rates are beating Moore’s law and consumers are reaping the benefits. According to recent analysis by the Yankee Group, phones with an advanced Operating System were 12 percent of the market in 2007, but will be nearly 40 percent by 2014. Markets that grow this fast always have some challenges and for smartphone market, the challenge is network congestion. Wireless networks were built for voice calls and most cell sites are still connected to the core network by old style T1 or E1 lines. AT&T recently addressed the congestion issue with tiered price plans for data. But those price plans also are attracting new customers. But if your network is congested, is attracting new customers a good idea?
Continue reading "Smartphones are so cool even the Queen wants to get in on the action"

More: Watch videos from SAS on YouTube, watch full-length SAS Webcasts or learn more about The Premier Business Leadership Series (next stop: Vegas).

The Mobile Communications article, Why retailers need to be mobile for the 2010 holidays includes a lot of compelling reasons for taking your sites mobile. I pulled together a list of six reasons from that article plus a few other sources so you can see the full argument here in a quick, handy list:

1. Retail sales for mobile commerce in 2009 grew 117%, up from 57% in 2008, and will continue to increase throughout 2010.
   
2. For the first time there are more smartphones than desktop computers being sold, according to IDC.
   
3. The sheer number of smartphone users has more than doubled, and Digby expects at least 65 million more to be enabled by year’s end.
   
4. The average mobile subscriber is age 25-34 and nearly twice as likely to make more than $100,000, according to NielsenWire.
   
5. Mobile represents an additional revenue opportunity because people can buy anytime, anywhere and immediately – allowing retailers to capitalize on impulse purchases.

And number six….. data collection.

Companies can gather a treasure trove of information including product views, pages users linked to, exit points, purchases, and product feedback shared with friends during chat sessions.

The question is, how do retailers use social media and mobility data for better merchandise planning? At NRF Tech on Aug. 16, SAS’ Greg Soussloff is hosting a roundtable with some of retail’s top IT executives to answer that question. He’ll report back with ideas from that discussion, so stay tuned…

In the meantime, check out a real-world example in this article detailing how Wet Seal’s social media and mobile activities have impacted merchandise and assortment planning. The junior clothing retailer’s online fashion community allows users to build, tag, share, rate and purchase outfits through a personalized virtual boutique. This user-generated content is placed directly into the online and mobile purchasing processes. Search for a pair of skinny jeans, for example, and the top-ranked user-generated outfits containing those jeans pop up.

By analyzing the online outfits and ranking data, the company can discern trends, see customer sentiment about its products and translate that into better merchandising decisions.

We hear communications service providers (CSPs) saying how important it is for them to improve the customer experience. But do they really understand the total customer experience (not just quality of experience)? Across billing, service, sales and marketing? Do they understand how the customers’ ecosystem of devices, product bundles and complex services affect their experience or how the influence of a good friend will push them to churn? Are they aware of duplicate or conflicting campaigns and do they have the power to eliminate them and replace them with effective ones?

To gain a real understanding of the customer’s experience and strategies to improve it, CSPs need analytics. With analytics, they can gain a holistic and integrated view of the customer’s experience, understand and predict behavior, and develop effective strategies within every department and every service line to improve the experience while growing revenue and profits. Simply put, analytics drive sound decision-making and profits.

Analytics are not just about building churn models!
Analytics have been widely underutilized outside the marketing department! Only recently have we seen the interest in analytics really take off. But still, there’s a lot of misinformation and missing information about how analytics can improve enterprise performance and the customer experience.

What are analytics anyway?
Many don’t understand how analytics differs from basic reporting. While a report can show how much revenue was generated from a campaign, analytics can reveal how many unprofitable customers have been targeted for a campaign and the impact of that campaign on profitability. While a report can show a churn level, analytics can identify the root cause of churn and predict churners. A report can show network utilization and faults. Analytics can identify root causes of network degradation and the impact on service and repair costs.


Continue reading "Beyond Churn - the many missed opportunities of applied analytics in CSPs"