Credible Risk Classification-How To Create Risk Classification Systems With the Maximum Price DifferentiationWhile Addressing Concerns of Credibility

This paper outlines an objective approach to creating classification systems with maximum price differentiation while addressing concerns of credibility. The formula developed in this paper will yield a numeric score, which ranks the varying classification systems as applied to a given data set. The score is capable of ranking class plans with different numbers of classes. Therefore, this formula determines "the point at which partitioning divides data into groups too small" to be of value for price differentiation in a competitive marketplace.