By The U.S. Government has granted economist G. Michael Moebs, founder and CEO of economic research firm Moebs Services, a second patent for original and innovative work in the area of risk assessment and management.
Moebs has developed a system and methods by which the risks associated with any new opportunity or ongoing relationship may be assessed. "This system allows lenders, landlords, employers, insurers - any provider of a service or good - to properly identify the risk of a transaction or relationship," explains Moebs. "It not only benefits businesses, but it opens up opportunities for people traditionally excluded from the financial arena to participate because the results can lead to more people being included rather than excluded."
Another Benefit for Financial Institutions
Starting at the backend of the decision process, Moebs' methodology identifies the process to quantify risk and qualify candidates for loans, leases, employment and insurance, and gives the proper price based on risk. It offers bottom-line benefits to financial institutions, yet allows those with financial difficulties an adequate price based on their risk. "In Miami, we have been able to reduce losses on unsecured credit from 23 cents on $1 to less than 6 cents on $1, which allows more people to participate," said Moebs.
Risk versus Risky - Using the Scientific Method
Moebs' experience growing up on the South Side of Chicago and learning about the vagaries of "street pricing" and his graduate work at the University of Chicago studying under Milton Friedman and George Stigler taught him that there was an empirical way to assess risk and set subsequent prices.
This expanded system incorporates risk with all price factors: volume, the sales price, competitive prices, value, relationships with other goods or services, cost, and both provider and user risk. The more each of these factors is empirically derived the less risk there is.
According to Moebs, his focus is to elevate risk from the subjective, qualitative level to an empirical, quantitative rank which is not limited to a numeric expression and does not preclude judgment. Businesses benefit by: reduced costs, more volume as users increase use, more users participate, and deeper penetration achieved into risk groups often written off by insurance companies, lenders, landlords, employers, etc.
Moebs established a "laboratory" at Moebs Services, testing a multitude of different algorithms under unique situations and, with the assistance of clients who served as beta sites, developed an original approach to identifying risk, analyzing risk, and incorporating these findings into price. The results are expanded volume of users for providers and expanded benefits for users, especially those often excluded from goods and services for being too risky.
Moebs continues to develop new systems and methodologies for risk identification and management.
About Moebs $ervices, Inc.
Moebs Services, an independent economic research firm established in 1983, collects statistically significant, primary empirical data about financial institutions' services, pricing, operating expenses and financial condition. Data is then analyzed in a counter-intuitive manner, resulting in solutions that make sense. A special Risk and Pricing Program is being offered on February 10-12, 2014, in Palm Springs, CA. For more info please visitwww.moebs.com.
About G. Michael Moebs, Economist & CEO
Founder & CEO of Moebs $ervices, Inc., Mike is known for his proprietary research addressing topics such as stress testing, economy of scale and "near money" analyses. He has served as a bank president, chief operating officer of a multi-bank holding company, director of a credit union and director of eight different banks. Mike has authored seven books on risk, and 13 more on lending, expense control, and pricing and is the force behind Moebs Services Pricing Institute. He directs Moebs Services Pricing Surveys published four or more times annually.
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