Introduction to Survival Analysis in Business

INTRODUCTION TO SURVIVAL ANALYSIS IN BUSINESS By Jeff Morrison Survival model provides not only the probability of a certain event to occur but also when it will occur ... survival probability can alert a company whether or not a specific account needs a special treatment … the analysis can be used effectively in retaining existing customers and acquiring new ones in various industries including telecommunication, banking and finance. It has been said that timing is everything — especially in the area of romance. Well, the same may be true in business. Of course, the first thing that might come to mind is the stock market. If we only knew when a particular stock was going to jump in price, we could quit our day jobs! Unfortunately, that kind of information is often not available. What is available is a field of statistics called Survival Analysis. It deals with the timing of events with applications spanning medicine, law enforcement, banking, telecommunications, and a host of other industries. As the field of credit scoring is focused on predicting ‘if’ an account will become delinquent over a certain span of time, Survival Analysis can tell us ‘when.’ Survival ...