by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
We all understand the power of diversity and the evils of groupthink that is caused by a lack of diversity in thought, opinions and ideas. However have you taken time to look around at the key members of the risk team at your organization? (By the way, the key members of your risk team may not be a part of the risk team.) How much diversity is there in your risk management system? When you closely examine the structure you will see two, perhaps three distinct clusters of individuals – perhaps the wise old experienced ones who hold the institutional knowledge of how things have been done for the last century, and those with advanced degrees of some shape or form that generally are quantitatively based. No offense, but that is not the most diversified of portfolios. To rectify the situation I propose at least four new hires for your organization’s risk system. Unfortunately I expect few will take my advice, but for those that do I strongly believe that there will be unexpected rewards and pleasant surprises.
In no particular order …
Each risk system should have a sociologist. I know that I have blogged and spoken on this several times before, but the point needs repeating. A sociologist studies how groups of people behave. The emphasis here is on groups. Understanding how individuals behave is important, but how individuals behave is not the whole story. In fact there is a lot of evidence that individuals behave very differently in the presence of a group. We know this. Yet what do we do about it? Answer – nothing. Organizations are groups of people. An industry is composed of groups of people. The economy is composed of groups of people. Yet we focus on the individual and assume that things scale. Things do not scale when it comes to people. People are complex, and groups are complex adaptive systems. Groups are not the sum of the individuals – and for that matter there is never an “average” individual. A sociologist helps the organization understand this in new and novel ways that the old embedded employees cannot see and ways that the math wizards can never imagine. A sociologist is a valuable risk team necessity.
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