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 an artist. An artist does not see things as they are, but as they might be. An artist sees things in new ways that are creative, novel and not bound to tradition. A good artist creates paradigm shifts. An artist helps an organization visualize. A good artist is not committed to just one style or medium. An artist helps an organization capitalize on Nason’s First Law of Risk Management. (You say you forgot Nason’s First Law of Risk Management? I will refresh your memory: the mere act of visualizing a risk automatically increases the probability and magnitude of it occurring if it is a good risk, while decreasing the probability and severity of it occurring if it is a bad risk.)
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