Fraud Analytics in RapidMiner

This is a great video presentation on Fraud Analytics use case with RapidMiner. See my notes below.
##Some key concepts
More complex model, the lower the training error but higher test error. Simple models are better, try explaining them to children. Data Scientists understand the technical aspect, need to communicate results with analysts. Sell results to businesses. Tie $ to the results. Speak same language with business. Map performance metrics to business related figures. AUC and recall doesn’t necessarily mean $ to the business, show how. A/B testing method widely used in Marketing. Also consider a “do nothing” model and compare with implementing data science solution. Don’t fear sharing best practices and ideas with similar businesses. Fraud model follows traditional validation method. 80% Training and 20% as Holdout. Both training/holdout sets taken across same time period. Handy trick, use sum of transactions as example weights. (this is cool) Apply $ value to your true/false positive/negatives. Compare with Default model (no model). Generate a money plot! ##Some questions – How does this relate to regression? – If a simple model not good enough, how do you sell a complex one like Deep Learning? – Is it better to have the Data Science team be embedded in the Business Unit or as a separate team? – How do you try to explain the uncertainty of prediction intervals to business stakeholders? – How do you account for seasonal drift? – The model will drift overtime, should the model be updated or retrained over time? – Do you build a model to optimize business results or is it a byproduct of the prediction?