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ACCA Strategic Professional · Advanced Performance Management · Data science and analytics

Linden Bank wants to progress from reporting last month's loan defaults to a position where its system recommends credit limits for each customer. Which sequence correctly shows the increasing sophistication and value of analytics it would move through?

The correct sequence is descriptive, diagnostic, predictive, prescriptive. The bank first reports what happened, then explains why defaults occurred, then forecasts future defaults, and finally recommends actions such as credit limits. Each stage builds on the previous one and adds more decision-making value.

  1. APrescriptive, predictive, diagnostic, descriptive
  2. BDescriptive, diagnostic, predictive, prescriptiveCorrect
  3. CDiagnostic, descriptive, prescriptive, predictive
  4. DPredictive, descriptive, diagnostic, prescriptive

Explanation

The usual progression is from what happened (descriptive), to why it happened (diagnostic), to what will happen (predictive), to what should be done (prescriptive). Recommending credit limits is the final prescriptive stage. The other sequences reorder these stages incorrectly.

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