Data Overload! How Your Risk Management Team Can Avoid Analysis Paralysis

Quickcheck Canada
August 19, 2016

Analyzing and reporting on a business' operations is a very healthy thing to do. It's important for a company owner and their management team to properly analyze historical data to discover trends, predict what's going to happen, and plan how to transform their findings into an actionable strategy. However, there is a point where over-analyzing can become counterproductive. Some companies get so mired in an influx of data that they find themselves unable to make a decision, and if a business is spending too much time going over their reports and figuring out how to be productive, opportunities can pass them by and it ends up being a waste of time. An analysis should serve an immediate purpose and provide employees and managers with a game plan - it should not be used as something to sit and contemplate over for too long.

What Causes Analysis Paralysis in the Lending Industry?

For those who are involved in the payday loan industry, there are many things that could cause analysis paralysis. First and foremost, over calculating potential risks can be a big problem. If a lender is looking at their analytics and finds that they should be limiting the number of people they are offering loans to, then they could be potentially harming their business by reducing their ability to make profit. Instead, a lending company should be properly analyzing which situations need to be taken care of and which ones are a reasonable risk to the business overall.

Another thing that causes analysis paralysis in the lending business is fear. When a business owner is looking at the raw data, they may become fearful of losing even more money. This may put them into a state of mind where they would be better off doing nothing and not losing any money. However, businesses in this situation are not going to grow at all. This state of paralysis is unhealthy for any business, especially for those in the payday loan industry.

Overcoming Analysis Paralysis at Your Lending Business

One of the best ways to avoid a state of paralysis is to set up regular reports and analytics based on predetermined metrics. A meeting could be held to go over the initial set up of the reports, but once set they should allow for immediate action when issued on a regular basis. The reports should help a team come up with KPI's (Key Performance Indicators) that they can use to increase company profitability. The initial analysis should also help a lending business come up with a specific goal that reporting can help them achieve. If the need is unclear or the road to success is becoming blurry, it's time to stop and start over with a more focused plan.

Other important ways to avoid analysis paralysis is to set deadlines for the desired goals, and to delegate tasks to the right people. If everybody knows what part they need to play in a business's success, it will be much easier for the company to achieve. Also, if each person knows what they need to do and how quickly they need to do it, they will be taking action and avoiding a standstill.

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