Hi I’ve been given a question relating to business analytics. I’m given a data s

Question

Hi
I’ve been given a question relating to business analytics. I’m given a data set to train my algorithm to determine how to detect insurance fraud and I’m not sure how to classify the four different cost scenarios. The four scenarios I’ve come up with so far are:
-No fraud and inspector used: $3000 + amount claimed
-No fraud and no inspector used: amount claimed
-Fraud and inspector used: $3000 - $6000
-Fraud and no inspector used: amount claimed
Would these produce an optimal solution? The GoFarm insurance company insures farmers in Alberta against damages caused by floods, hail, or tornados. When submitting a claim, a farmer needs to specify the amount claimed (S) and the area of their farm, in hectares. After receiving the claims, GoFarm sends inspectors to a subset of farms to check whether the claims are valid or fraudulent. Sending an inspector to a farm costs $3,000 per farm. If the claim is not fraudulent, then GoFarm pays the amount specified in the claim. If the claim is fraudulent, then the claim is not paid and the farmer is fined. The average amount of fine is $6,000 per fraudulent claim. So the net monetary consequence for the company is a revenue of $6,000-$3,000 = $3,000. If GoFarm does not send an inspector to investigate a claim, then GoFarm simply pays the amount claimed GoFarm needs your help to predict which claims are most likely to be fraudulent and which claims to check (by sending an inspector). You are given a training set (Worksheet "Training") of 40 claims from a previous year, showing the area in hectares, the amount claimed, and whether the claim was fraudulent. You are also given a test set (Worksheet "Test") that shows the area in hectares and the amount claimed for 35 claims made this year. The test set does not include information about whether the claims are fraudulent, because this information is still unknown. The following questions will ask you to compute the total net cost incurred by GoFarm under different policies, where Total net cost-cost of paying claims cost of sending inspectors money recovered through fines for fraudulent claims

Explanation / Answer

If I felt my group was making an unethical decision, I would quickly report it to the HR or the management whoever can help stop that decision. I would go as far as possible to stop that decision as I feel it is the right thing to do. Letting something unethical happen under your watch conflicts my personal values and the values of the company. My personal opinion of people who report wrong doing in an organization is positive. It takes guts to stand against a force and say what is happening is wrong and I am going to report it.

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