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Risk-Aware Optimization Model

Case Study — Product Data Scientist Portfolio

90-Second Summary

Problem

Optimization systems (e.g., fraud detection, risk scoring) face a tradeoff: aggressive thresholds reduce loss but increase user friction; conservative thresholds protect experience but increase operational risk.

Approach

Built a simulator that models precision vs recall as a function of sensitivity and risk tolerance. Outputs live risk probability, alert trigger state, and estimated loss avoided.

Output

Interactive controls for sensitivity and risk tolerance. Real-time precision-recall curve visualization and dollar impact of loss prevention.

Decision

Calibrate thresholds so alert triggers at risk probability ≥60% while keeping false-positive burden acceptable.

Measurement Plan

Time HorizonMilestoneSuccess Criteria
0–30 daysBaseline model in placeHistorical precision/recall measured; threshold options documented
30–60 daysA/B test on thresholdsFriction metrics (block rate, appeal rate) tracked by variant
60–90 daysOptimal threshold rolloutLoss avoided > baseline; friction within SLA

Success Metrics & Tripwires

Success: Reduction in operational loss; precision > target; recall adequate for risk coverage; appeal rate below threshold.

Tripwire (anti-success): Spike in customer complaints; increase in manual review queue; model drift detected via monitoring.

Instrumentation / Event Taxonomy

Event NameRequired PropertiesNotes
risk_score_computedentity_id, score, model_versionEvery scoring invocation
alert_triggeredentity_id, score, threshold_usedWhen score exceeds threshold
alert_outcomeentity_id, outcome, loss_preventedTrue/false positive resolution

Data Model Layer

Staging: Raw scoring events in stg_risk_events. Normalize timestamps and entity identifiers.

Marts: fct_risk_scores — entity_id, score, threshold, outcome. agg_precision_recall — model_version, precision, recall, date.

Tests: Uniqueness on (entity_id, timestamp); not_null on score and model_version; valid score range.

Documentation: dbt docs; schema for downstream monitoring dashboards.

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