Risk-centered pricing: price optimization, CLV and elasticity

What it is about

Daniela León Cornejo, founder and CEO of Value of Insights (VOI), presented at the Fourth Annual Risk Conference (September 17, 2026) how the price of a financial product not only rewards risk but also selects which risk enters the portfolio.

The 24 slides start from the situation of the Dominican financial system, argue that some risks must be charged for, structured or avoided, and show how adverse selection leaves signals before it appears in delinquency. They propose moving from approving or rejecting to choosing the best offer structure, with an economic floor and an optimization layer, using risk-adjusted customer lifetime value and price elasticity. They close with stress testing the strategy and with integrated risk management as a competitive advantage. The appendices cover estimating elasticity with limited data and an application in insurance.

Objectives

• Explain how price selects risk and why expected loss changes when the price changes.
• Move from the decision to approve or reject to the choice of the best offer structure by expected value.
• Show how to integrate risk, capital, behavior and elasticity into a decision capability that learns.

Key takeaways

1. Not all risk should be rejected and not all risk can be offset with price.
2. Adverse selection leaves signals before delinquency: mix by price and channel, acceptance by score, early utilization, early delinquency, prepayment by good customers and bureau changes.
3. The optimal price does not maximize the rate: it maximizes expected value, which incorporates risk, capital and behavior; the same score does not imply the same decision.
4. A good offer combines an economic floor, which makes it viable, with an optimization space where the best offer for the customer and for the bank is decided.
5. The strategy must be stress tested and not only the balance sheet: the aim is not a perfect prediction but decisions that are robust to possible futures.