by Rick Nason, PhD, CFA
RSD Solutions Inc.
In my previous blog I talked about information not data. We have so much data coming at us that it is hard to make out the important information. Hard to see the forest for the trees, if you will.
In risk management, where data is flying at us from all angles (and data and software vendors even more so), how do we handle it?
Seth Godin in one of his recent blogs (The Blizzard of Noise http://sethgodin.typepad.com/seths_blog/2010/08/the-blizzard-of-noise-and-the-good-news.html ) talks about a similar situation in the general population where we are constantly bombarded with advertisements and such trying to get our attention. In that realm it is well known that we turn to our friends to help us sort the wheat from the chaff – to separate the good stuff from the noise. In other words, in a world flooded with impersonal information, we ironically come to rely more on more on our personal relationships.
Now think about risk management. The trend over the last 20 years has been to make risk management more objective and scientific. That means more data and mathematics, and less personal relationships or intuition. However it is people and interpersonal relationships that make the world go round. Is your risk system running on noise and data, or is it running on information and personal relationships?
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