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• What was “Risk” in the classical theory is the “Risk Cause” in TCM
• What was “Risk Effect” in the classical theory is the “Risk” in the TCM
• This is because the effect of any action like “price movement”, “supply delay”,
“failure of quality” or “incomplete construction” can be easily recorded and
measured, while the actions themselves may not be directly measurable.
• Variance is the measure of dispersion, the volatility around the mean value.
• Since this variance happens all the time, Risk in TCM is a certainty that must
be continuously measured, monitored and controlled.
Identifying relevant predictors is the key
• To monitor and control variance or risk, the variable factors, that are likely to
influence future behavior or results, are first segregated
• This segregation and data pruning is done to narrow the number of variables
to a few relevant predictors based on which the risk response model is
formulated on the basis of variance observed and the risk cause identified.
• This model is validated or even revised, periodically based on its Time Cycle
Module, which could be one week for projects and once a day or hour for
price movements.
• Predictive analytics used for managing risk in TCM is used in the field of
marketing, CRM, IT security, engineering, meteorology, and traffic planning.
Risk manager must have vertical knowledge
• In either case the predictive analyst must have both user experience
and insider knowledge of the vertical
• In both cases the model uses the same core principles of breaking
complex variables into simple linear equations, and measuring the
mean deviation, investigating the risk cause and planning the risk
response
• Vertical : FMCG
• Domain : Marketing & Advertisement
• Deliverable : Brand launch of a new soft drink
• Vehicle : Promotional campaign for the launch
• Association : Taste association with Brand name
• Taste : Tangy, “zyzy” taste at the tip of the tongue
• Campaign : A promotional campaign to match the unforgettable
zyzy” taste to create the Zephyr USP
Other Terms of reference
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