Using actuarial science to achieve high-impact profits

By running a Cost of Revenue analysis on a company’s data, Barnett Waddingham was able to identify the barriers to their commerciality, challenge their thinking and optimise their profitability.

Observation

Our FTSE250 global client – a renowned hotel chain – identified the costs associated with its various revenue streams as a key business issue. They wanted to better understand its sources of revenue and the relative profitability of the different streams.

Any new analytical insights could therefore be used to drive lower costs and more business towards the most profitable streams.

Test and analysis

We undertook a data exploration and analysis project, bridging two departments within the company. This involved working to extract ‘big data’ from various in-house IT systems and understanding the operational realities of the data, which involved entries from hundreds of front-line staff.

We developed data cleansing algorithms to combine multiple databases and extract the relevant information, before applying our actuarial expertise to synchronise this new information with the business’s key objective.

Conclusion

With our proportionate use of analytics and quantitative methods, we were able to give the management team previously undiscovered insights into the exact sources of their revenue, the actual costs associated with them, and where changes might be made to maximise the impact on net revenue.

This enabled the client to make better informed decisions to optimise profitability within their core business with the potential benefit in the millions.

We can help you

Our method involves unlocking an organisation’s DNA – getting under its skin, uncovering what makes it unique and helping the employer identify the information that will help the business thrive in a competitive environment. Applying actuarial science is core to this approach, particularly as it pertains to risk analysis.

If you think your team could benefit from our expertise in actuarial science and data analysis, please contact Harshil Shah or Allan Engelhardt, who will be happy to help. Alternatively, you can learn out more about our services in risk advisory and analytics and management decision analytics.