Prepping for Book Club

by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.

I facilitate a book club for the alumni of the Faculty of Management at Dalhousie University where I am an Associate Professor of Finance.  (Brew and Books – check us out on Face Book!)  The book for tonight is “Shop Class as Soul Craft:  An Inquiry into the Value of Work”, by Matthew B. Crawford (published by The Penguin Press, 2009). 

This non-fiction book describes the author’s experiences of giving up a high profile role as the head of a think tank to become a partner in a vintage motorcycle repair shop.  Quoting from the book jacket, “A philosopher / mechanic destroys the pretensions of the high-prestige workplace and makes an irresistible case for working with one’s hands”.  I highly recommend the book, especially for those who have uncritically jumped on the Richard Florida (Who’s Your City) and other knowledge worker / creativity worker bandwagons.

I was getting my notes together for tonight’s meeting when I came across this quote. 

“The mechanic and the doctor deal with failure everyday, even if they are expert, whereas the builder does not.  This is because the things they fix are not of their own making, and are therefore never known in a comprehensive or absolute way.”

Isn’t that a little bit like the plight of the corporate risk manager?  Doesn’t the corporate risk manager face failure everyday as the situations or incidents that arise are rarely of their own making? 

I recognize that it is the role of the risk manager to put in place systems and procedures that prevent or at least mitigate negative risk events happening.  The perception (hope, falsehood?) is that the risk manager is a control manager.  However the reality is that realized events are often beyond the control of even the most thoroughly prepared risk manager.  World events are not of the risk manager’s making, nor are they under the control of the risk manager - no matter how expert they may be.

The situation for the financial risk manager is even more pronounced, as no matter how large their financial institution of fund may be, they are mere minnows in the ocean of the world’s financial markets.  Nothing in their expert toolkit can prevent or foresee the specifics of a tsunami until it is too late.

Despite my best intended efforts, I will not be in complete control of tonight’s book club meeting.  While I will attempt to steer the discussion as I believe to be most appropriate, I know that the thoughts of the book club members are not of my own making, and thus not under my control.  That is an optimistic comment, as it has the potential to produce many wonderful surprises – not only for me, but for the book club members as well.  Perhaps risk managers should also celebrate the fact that not everything is of their own making and thus not under their control.