Sunday, September 18, 2011

Foxes vs. Hedgehogs

by Rick Nason, PhD, CFA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com 

 

A fox knows many things.  A hedgehog knows only one thing, but knows it well.  Is your risk management unit a fox or a hedgehog?  There are arguments for both strategies (for example the well known  book Good to Great argues that hedgehog firms perform best, while most will agree that having a portfolio of ideas is preferable).  What is not acceptable however is not knowing which category the firm falls into. 

 

A firm that thinks it is a fox, when it is in reality a hedgehog is as stupid, weak and exposed as a firm that thinks it is a hedgehog when in reality it is a fox.  So what is it?  Is your risk management unit a fox or a hedgehog?

 

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