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The High-Risk Game of Spotting High-Risk Customers

Regardless of industry, every business has to deal with high-risk customers or employees. If you can manage them correctly, the upside is tremendous. If not, they can potentially crater your operation.

As a long-suffering Charlotte Hornets basketball fan, I’m all too painfully aware of this phenomenon. Last season, we (I am one of those insufferable fans who refers to his team as “we” as though I’m actually part of the team) took a chance on a high-risk player named Lance Stephenson by signing him to a multiyear contract. Lance (whom I refer to on a first-name basis even though we’ve never met, and I’m pretty sure we never will meet) was one of those guys with a checkered history in terms of on- and off-court performance, but who’d shown enough potential upside that it was worth taking the risk on acquiring him.

I’d love to say that the gamble paid off, but unfortunately it did not—in fact, it was a near-catastrophic disaster. Lance played the worst ball imaginable, ended up getting benched for much of the season, and the team was out of the running for the playoffs by March, which is bad even by their poor standards. The only way to put a moderately happy spin on the results is to note that the Hornets managed to trade Lance this summer for a similarly risky player (Spencer Hawes, on the off-chance that you needed to know this detail) who’s been vaguely useful so far in this new season. All in all, it was yet another chapter in a seemingly unending tale of Hornets fiascos.

But I can’t find too much fault in the Hornets. That’s because in the NBA, as in other competitive fields, it’s those high-risk players who are often the only way to elevate your organization or to even keep it viable.

Take auto finance, for example. With so many auto loan options available to consumers, seeking and managing high-risk customers is a necessity. Of course, acquiring them is the (relatively) easy part. Managing them once they’re on your books is where expertise in your approach and decision making is absolutely critical.

Enter FICO, which has an entire suite of customer management solutions that are designed to optimize your relationships with high-risk customers. FICO can provide its own data points but also integrate your existing infrastructure to formulate an entire decision strategy for managing high-risk customers that can be automated and easily tweaked based on new data.

In the short video below, which is part 3 in our automotive financing series, our solution expert (and my fellow blogger) Therese Henry walks you through some of the particulars in our approach to identifying high-risk customers.

For more details on our approach, visit our auto finance web page or read my blog post on part 2 in this video series.

If only the Hornets would use some of FICO’s solutions for their player management, I bet I’d be a much happier fan!

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