by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc
Jim Collins in his book “Good to Great” talks about the need for leaders to be humble about their success. Thinking that you have found the magic formula for success is almost assuredly going to lead to eventual disaster.
The risk management community often believes it has found the formula or technique for success. Think about Long Term Capital Management as the poster child for intellectual arrogance. Enron is also challenging for this role. Amaranth would likely want to challenge as well. Almost certainly you can think of an individual in the risk industry who is cocky enough to think that they uniquely understand “The Truth”.
The events of the recent credit crisis have shaken the risk management industry. However it remains to be seen if a critical mass of risk managers has seen the relevance of humbleness or Level 5 management. Brilliance is often stupid.
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