by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
What do the books “The Inner Game of Tennis” (by Timothy Gallway) and “Managers Not MBAs” (by Henry Mintzberg) have in common? The answer is that both argue in their own way that “Experience precedes technical knowledge”.
“Experience precedes technical knowledge” is a direct quote from the Inner Game – the best selling tennis book that was originally published in the 1970’s. The argument is basically that you do not know much about playing tennis until you have picked up a racquet and hit some tennis balls. Technical expertise is meaningless unless you have experience. Mintzberg argues much the same thing when he essentially argues that MBA programs have limited effectiveness due to the limited experience of the students in business school.
This brings us to risk management. The demands of quantitative regulation (regulation by means of quantitative measures) and the prominence of quantitative techniques for best practice in risk management has led to an emphasis on technical knowledge over experience. In my opinion this puts the cart before the horse, and is as useful as hiring a PhD in tennis as your tennis coach, even though the person has never picked up a tennis racquet.
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