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In the mid-2000s the Ministry of Justice (MoJ) devised a new measure to compare area variations in reconviction rates across the Probation Service in England and Wales so that these differences could be taken into account when allocating resources. A number of Probation Trust Chief Executives have used Hedderman's research successfully to argue for revisions to the reconviction 'performance measure'. Her findings also influenced the Justice Select Committee's recommendation that the original measure should be replaced, as she showed that it led to unfair comparisons, was easy to manipulate, and failed to provide information which could be used by areas to improve their impact on reoffending. She has since worked directly with Kent, London and Hertfordshire Probation Trusts to address this last point.
Research carried out by members of the Credit Research Centre (CRC) at the University of Edinburgh has changed the way that credit risk modelling teams in major multinational retail banks think about and model the probability that an applicant will default on a loan. Such models are used monthly to assess the risk associated with most of the 58 million credit cards in the UK and hundreds of millions of credit cards elsewhere in the world. The research has also changed the way banks model a crucial parameter in the amount of capital they have to hold to comply with international regulations, and has allayed their concerns about estimating models based on only samples of previously accepted applicants.
Salford Business School researchers were commissioned by PA Sport, the sports division of the Press Association, the Football Association Premier League (FA), and FootballDataCo, which handles the rights to football data for the FA, to develop the quantitative analysis and models for an objective index of football player performance. The official player ratings system of the English Premiership, Championship and the Scottish Premiership and first of its kind:
Credit scoring, the process of estimating the risk of lending to consumers, has traditionally estimated the likelihood of default over a fixed period, usually 12 months. Research carried out at Southampton's School of Management has led to a gradual shift by many financial institutions in the UK and elsewhere towards an alternative method that estimates default over any period. This approach provides accurate risk estimates over any time period. It also allows for the inclusion in the "scorecard" of economic conditions and the lending rates charged — features whose absence from previous scorecards was identified as contributing to the sub-prime mortgage crisis.
This case study describes the effects of a new performance management system, developed in China and adopted by organisations facing complex management challenges. To date, seven public and private sector organisations have successfully used the `3E' (Effectiveness, Efficacy, and Efficiency) system for tasks as varied as developing performance indicators, improving management communication and designing appraisal systems that work under conditions of rapid growth and change.
The participating organisations include the Chinese Academy of Sciences (CAS), Hunan University, Tonsan Adhesives Inc, Xingxiang Insurance, Sun-rivier local government, Liao-ling Plaze hotel and Hua-bao International Holdings. Their adoption of the 3E system has resulted in improved performance management within these organisations.
The Spanish Cajas [savings banks] are being radically reformed with explicit reference to research that Vicente Cuñat and Luis Garicano undertook from 2009-2012. The research found that: (a) many Cajas´ managers were politically appointed and poorly qualified in terms of relatively low educational attainment and no previous banking experience; and (b) the presence of such managers substantively and negatively impacted the Cajas' performance during the financial crisis. Emergency government legislation (Royal Decrees in 2010 and 2013), and the July 2012 Memorandum of Understanding between Spain and the Troika that includes a specific requirement for Spain to reform the sector, rely explicitly on this research.
Research of Professor Brigo in the areas of credit risk, pricing models for the valuation of counterparty risk, and the development of accurate calibration methods of various credit risk models has generated significant impact both on public policy and on practitioners and professional services. His models were implemented and his calibration methods adopted in the financial industry. The significance attached to his work by the industry also resulted in a collaboration with the German regulator (BAFIN). Further evidence of his impact can be found in the fact that a Court of Law based its analysis in a financial intermediation case on Brigo's research.
Research on risk assessment of SMEs conducted at the University of Edinburgh Business School (2005-current) in conjunction with the international credit industry has improved understanding of SME behaviour with a view to assisting lending bodies in their decision-making. It has led to refinements in the process of developing commercial credit risk models by providing valuable additional details to enhance existing models. It has developed methodologies now used by some of the leading lenders [text removed for publication] to cut the cost of providing credit, thereby making more credit available to SMEs. The reach of the work has extended across 349 credit practitioners from 38 countries.
Research at the Maxwell Institute led by Radcliffe from 1996 onwards has developed new statistical models of the response of customers to targeted marketing. Traditional customer targeting misallocates resources by failing to estimate the change in the probability of customer behaviour that results from a given marketing action. This results in three kinds of waste: treating customers for whom intervention is ineffective, failing to treat customers for whom it would be effective, and treating customers for whom the intervention is counterproductive. The new models, known as uplift models, predict the change in behaviour, allowing lower target volumes, larger changes in customer behaviour, and suppressing counterproductive interventions. Uplift modelling has been commercialised in the form of software and consulting services from 2000: it is the core of the software Portrait Uplift sold by Pitney Bowes since 2010. The research has therefore had a major economic impact on Pitney Bowes and earlier companies selling uplift software and services, and on their customers which include US Bank and phone operators T-Mobile Austria and Telenor.
In response to the deficiencies in bank risk management revealed following the 2008 financial crisis, one of the mandated requirements under the Basel III regulatory framework is for banks to backtest the internal models they use to price their assets and to calculate how much capital they require should a counterparty default. Qiwei Yao worked with the Quantitative Analyst — Exposure team at Barclays Bank, which is responsible for constructing the Barclays Counterpart Credit Risk (CCR) backtesting methodology. They made use of several statistical methods from Yao's research to construct the newly developed backtesting methodology which is now in operation at Barclays Bank. This puts the CCR assessment and management at Barclays in line with the Basel III regulatory capital framework.