An analytical model is a structured representation of a business process, financial relationship, or decision problem, built to support analysis, projection, or optimisation. Analytical models range from financial planning models that project future performance from operational assumptions, to statistical models that identify patterns or generate predictions from historical data. The quality of an analytical model — its structural accuracy, assumption transparency, and fitness for purpose — determines the reliability of the insights it produces.
Why This Matters
Analytical models are the tools through which data is translated into forward-looking insight and decision support. The same data can produce very different outputs depending on how the model is built, what assumptions are embedded in it, and whether it accurately represents the business relationships it purports to model. Understanding what a model does and does not capture — and the assumptions it depends on — is essential for interpreting its outputs with appropriate confidence and identifying when model outputs should be treated with caution.
Where This Fits
This term sits within the BI & AI area of Performance & Control.
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