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Method for evaluating a business using experiential dataRelated Patent Categories: Data Processing: Financial, Business Practice, Management, Or Cost/price Determination, Automated Electrical Financial Or Business Practice Or Management Arrangement, Operations Research, Market Analysis, Demand Forecasting Or SurveyingMethod for evaluating a business using experiential data description/claimsThe Patent Description & Claims data below is from USPTO Patent Application 20060293946, Method for evaluating a business using experiential data. Brief Patent Description - Full Patent Description - Patent Application Claims
CROSS-REFERENCE TO RELATED APPLICATION [0001] This application claims priority from U.S. patent application Ser. No. 60/527,688, entitled "METHOD FOR ASSESSING, MEASURING AND RATING OPERATIONAL PERFORMANCE OF HEDGE FUND BUSINESS," filed on Dec. 5, 2003. BACKGROUND [0002] 1. Field of the Invention [0003] The present invention relates to a method of measuring enterprise risk, performance, and potential, and more particularly, measuring the enterprise risk, performance, and potential of financial services businesses. [0004] 2. Background [0005] Businesses generally strive to improve performance and lower risk with the goal of enhancing business potential. Financial services businesses, however, typically have more data, information and systems to measure the performance and risk of their investment portfolios than they have to manage the businesses supporting those portfolios. As a result, financial services businesses have scant and fragmented information about their business operations, particularly information related to enterprise risk, performance and potential. [0006] To evaluate enterprise (or operational) risk, prior art methods use loss event narrative summaries as source data, usually excerpted from loss event logs maintained by a compliance officer. This information summarizes past loss events in an effort to raise awareness and to document the type, frequency and magnitude of loss events. While instructive in understanding what happened and the resulting consequences, this approach does not lend itself to pro-active loss prevention, thus calling into question the efficacy of traditional source data and enterprise risk methods. [0007] In the financial services industry, the data, information and systems available to manage investment portfolios are highly sophisticated and comprehensive, however, there is little in the way of data, information or systems to manage investment businesses. Prior art methods use portfolio performance data to gauge how well a financial services business is performing and make no attempt to access or employ business operating data. This results in a lack of understanding about the business operations of financial services businesses and a dependence on anecdotal information to make business decisions. [0008] Lacking data, information and systems, the various constituencies of financial services businesses operate with an isolated view and do not have the means to understand the interdependencies across business lines, nor the impact of those interdependencies on the business. In addition, they do not have a quantitative framework to evaluate the business as a whole. Thus, there is no enterprise, or "big picture," view to work from either to measure business performance or to root out operational problems or inefficiencies. Further, there is no effective way to measure business risk or identify and address risk exposure issues. [0009] To understand the ability of a financial services business to perform well in the future, prior art methods rely on past performance history despite the conventional wisdom that past performance is not indicative of future results. What's more, this data concerns only investment results and not the people, processes and technology having generated the results. Consequently, this approach does not provide a forward-looking perspective and provides little insight to understanding a financial services business. SUMMARY OF THE INVENTION [0010] The present invention provides a method for evaluating a financial services business, such as an asset management business or hedge fund, by using experiential data, i.e., data produced in the course of operating the business, to measure business risk, performance, and potential. The business is broken down into functions, each function being carried out through a number of activities. Each activity produces experiential data, i.e., data produced by performing the activity. Experiential data includes both qualitative and quantitative information compiled from operating systems, databases, interviews, paper-based files and financial records. Activities and functions are measured individually and then collectively to understand the business as a whole. [0011] A specific set of mathematical functions, referred to as metrics and algorithms, are applied to the collected experiential data to measure enterprise risk, performance, and potential. The measures generated are expressed as Key Business Indicators (KBIs), Operational Performance Benchmarks (OPBs), enterprise risk, business drivers and consistency potential. These measures provide a business rating for each function, activity, and the business (or enterprise) as a whole. [0012] The inventive method measures the potential of a financial services business to perform consistently over time by assessing experiential data extracted from the full spectrum of the business' functions and activities. The extracted data is fed into a series of metrics and algorithms that measure how well a business is performing from an operational (i.e., non-investment) standpoint. The information generated by the metrics is then compared to industry best practices and ultimately combined, or rolled up, to assess enterprise risk, performance, and potential. [0013] Two levels of analysis and perspective are provided, one at the functional level of the business (i.e., how well are the individual business functions performing) and the other, at the enterprise level (i.e., rolling up the business functions to understand the business as a whole). In this way, the present invention provides 1) an understanding of the interdependency of the individual business functions and their impact on the business as a whole, and 2) the ability to quantify the effect and impact those interdependent relationships have on the business as a whole. [0014] In addition, the present invention may be applied to examine specific aspects of a financial services business, and thus hone in on a particular area of concern. For example, the inventive method can be used to measure: [0015] the level of operational risk; [0016] the likelihood the business will perform consistently; [0017] the effectiveness of the decision-making process; [0018] alpha generation (growth in excess of market appreciation); [0019] the short and long-term scalability of the business infrastructure; [0020] the appropriateness of policies and procedures; [0021] the adequacy of oversight and controls; Continue reading about Method for evaluating a business using experiential data... Full patent description for Method for evaluating a business using experiential data Brief Patent Description - Full Patent Description - Patent Application Claims Click on the above for other options relating to this Method for evaluating a business using experiential data patent application. ###  How KEYWORD MONITOR works... a FREE service from FreshPatents1. Sign up (takes 30 seconds). 2. Fill in the keywords to be monitored. 3. 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