My Back End Calculation for an Automated Decision Engine is :
Assigning Values:
1. Stage of the Case
Pre-Trial: 1 point (High risk)
Discovery: 2 points (Moderate risk)
Settlement Negotiations: 3 points (Low risk)
2. Expected Recovery Timeframe
Less than a month: 5 points (Very low risk)
1-6 months: 4 points (Low risk)
7-12 months: 3 points (Moderate risk)
1 year: 2 points (High risk)
2 years: 1 point (Very high risk)
3 years: 0 points (Extremely high risk)
3. Estimated Damages
Assign points based on thresholds of damages compared to the requested loan amount:
Damages ≥ 10x Loan Amount: 5 points (Very low risk)
Damages ≥ 5x Loan Amount: 4 points (Low risk)
Damages ≥ 3x Loan Amount: 3 points (Moderate risk)
Damages ≥ Loan Amount: 2 points (High risk)
Damages < Loan Amount: 0 points (Unacceptable risk)
4. Defendant’s Policy Maximum
Policy Maximum ≥ 10x Loan Amount: 5 points (Very low risk)
Policy Maximum ≥ 5x Loan Amount: 4 points (Low risk)
Policy Maximum ≥ 3x Loan Amount: 3 points (Moderate risk)
Policy Maximum ≥ Loan Amount: 2 points (High risk)
Policy Maximum < Loan Amount: 0 points (Unacceptable risk)
5. Rejected Settlement Offers
No: 5 points (No settlement indicates optimism)
Yes: Assign points based on the offer relative to the loan amount:
Offer ≥ 10x Loan Amount: 4 points
Offer ≥ 5x Loan Amount: 3 points
Offer ≥ Loan Amount: 2 points
Offer < Loan Amount: 0 points
Scoring System
Sum up the points from all answers. Set thresholds to decide underwriting eligibility:
20-25 points: Strong case; proceed with underwriting.
15-19 points: Moderate case; additional due diligence needed.
Below 15 points: High risk; do not underwrite.
Sample Calculation of user data input
Stage of the Case: Discovery (2 points)
Expected Recovery Timeframe: 1-6 months (4 points)
Estimated Damages: 6x Loan Amount (4 points)
Defendant’s Policy Maximum: 10x Loan Amount (5 points)
Rejected Settlement Offers: Yes, 5x Loan Amount (3 points)
Total Score: 2 + 4 + 4 + 5 + 3 = 18 points
Result: Moderate case – Proceed with additional due diligence before underwriting.
