by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
Like many of you I sat and watched with a sense of expectation as Tim Tebow played awful for three quarters against the Chicago Bears last weekend. I kept watching the game in part because Tebow (and the Broncos in general) were playing in such a mediocre fashion. We all know the script – Tebow sucks statistically for three quarters and then in the fourth quarter comes to life to impossibly pull the game out of the hat for a win for the Broncos.
I suspect that the dismal performance of the Broncos for three quarters, only to pull out the game after coming from behind is making Rolaids addicts out of the Broncos coaching staff and management. The fans however seem to love it. The only stat that fans know about in the final analysis is who won. The vast majority of fans are not at all concerned with how the win occurs. A win is a win. Stats are simply things to debate in the off-season when there is nothing else to talk about. Broadcasters, coaches and managers seem to be the only ones concerned about performance statistics.
Now shifting back to risk management, which they tell me is supposed to be the purpose of my rambling – but thankfully short – blogs. Are risk managers more concerned about stats (i.e. VAR, risk weightings, volatility levels etc.) or are we more concerned with outcomes? The answer should be obvious, but I am not sure that it is. In my working with risk managers, they often seem more concerned that their numbers look good, and less concerned about the actual outcome (assuming of course that the numbers looked good beforehand). Perhaps risk managers should be more like the fans and more concerned about outcomes.
Sometimes the numbers suck, but the desired result occurs. Sometimes the numbers are great but the outcome sucks. Sometimes uncertainty occurs. (Did I say “sometimes” in the previous sentence – I meant “always”.) Stats are stats, and wins are wins. Sometimes (always) it really is that simple.
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