Blogs Versus Articles

by Rick Nason, PhD, CFA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com

 

Writing a blog is something that I generally enjoy.  The whole point of a blog being an idea that is put forward in an informal and top of head manner is fun to write, and fun to think about. 

 

Blogs are a lot more fun to write than a formal article.  In an article the argument is more formal, and as a result it can be come much less fun to think about and to write.  The focus in an article is on exactness, and that takes away from the flexibility, creativity and “in the momentness” of a blog.

 

I also enjoy reading the blogs of others.  Getting a quick snippet of what they are thinking about at the moment is a great way to learn and a great way to stimulate and generate ideas of your own.

 

It is too bad that risk management has become such a formal process at many companies.  I believe it takes away the creativity and the flexibility of mind that you see in blogs.  Yes – a more formal article is likely to have a better thought out argument than a blog.  Likewise a formal risk process is likely to be more coherent and logistically consistent.  However, just as a formal argument is not necessarily a better read than a blog, I am not sure that a formal risk process is always better than a creative “in the moment” risk process.

 

Throw out the old, ...

by Stephen McPhie, CA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com 

 

The principal at my daughter’s school made the observation that many kids in the class would end up in jobs that don’t exist today.  That is probably true, so what skill set do you try to teach the kids?  Obviously there are basics like language, basic math, etc.  But many employers complain that kids come out of school ill equipped for the workplace.  I would venture that learning how to learn, flexibility and not just an ability to embrace change, but also an ability to lead change would be worthy objectives.

 

But if the types of jobs are changing ever more rapidly, so are existing jobs.  And that includes the risk management profession at least as much as any other.  So are your risk managers content with today’s established practices?  Or are they constantly discussing and testing out new ideas to become tomorrow’s risk mangers?

 

 

Ideas Portfolio

by Rick Nason, PhD, CFA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com

 

 

Ever notice that your best ideas never arise when you are consciously thinking about them?  I get my best ideas when I am in the shower, driving to the office, on a walk, or while reading a totally unrelated book.

 

Perhaps in risk management we spend so much time consciously thinking about things that our minds do not have the peace of mind to actually think.

Throwing Out PowerPoint 2

by Rick Nason, PhD, CFA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com

 

In my previous blog I talked about changing over from PowerPoint to another presentation software.  There are several reasons for doing so, and to be frank a big part of the reason was to shake up my presentations.  We all need to make a change now and again to get our creativity mojo back.  (Am I dating myself by using the term “mojo”?)

 

PowerPoint is a great piece of software that has probably been abused more than anything else out there.  However there is no denying that it is a workhorse.

 

The one problem that I always had with PowerPoint though was the linearity.  It was one slide after another in a preprogrammed sequence.  It was hard to zig, when you needed to zig, and equally hard to zag when zagging was called for.

 

Risk management systems tend to be like that as well.  They tend to be workhorses for linear processes.  However risk is rarely linear.  Risk by definition zigs and zags.  Does your risk management system allow for you to zig and zag as well, or is it standard issue linear PowerPoint?

 

Has Austerity Gone Too Far? Unconventional Wisdom

by Don Alexander, MBA

Associate, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com

  

As we noted in our blog dated Feb. 24^th on Risk Washing, managers/companies (policymakers) often cloak themselves with conventional risk management measures to produce results.  However, there are times when conventional policies may not produce the desired result.Giancarlo Corsetti & Gernot Mueller discuss the application of fiscal austerity and when it might not produce desired results in a VOXEU piece called Has Austerity Gone Too Far, Feb. 20^th,

 

Numerous countries facing debt problems have recently embarked on fiscal tightening.  Yet it is not clear if it is a cure or a self-defeating strategy.  The measures adopted so far are not seen as sufficient to stabilize market concerns about debt sustainability.     

 

The weak output growth caused by fiscal austerity when combined with a renewed economic slowdown may itself fuel market doubts about government solvency.  Higher funding costs, combined with lower activity, might thus worsen fiscal positions, defeating the very purpose of the initial tightening measures.  The evidence suggests that where sovereign risk is high, fiscal tightening remains an important avenue to reduce deficits while limiting the cost to economic activity. 

 

There are cases in which monetary policy is constrained in supporting aggregate demand and governments should avoid immediate fiscal contraction while committing to a credible medium-term deficit reduction.  The authors note the fundamental importance of sovereign risk for macroeconomic stability.  The problem is that countries experiencing debt and sovereign-risk issues are more vulnerable to adverse borrowing conditions in the broader economy. 

 

This has three implications: (1) fiscal multipliers are lower when sovereign risk is high; (2) pro-cyclical fiscal policy may help macroeconomic stability; and (3) there’s a need for policies beyond austerity.  The authors suggest policies to counter the output costs of fiscal austerity.  One way is to reduce the impact of sovereign risk on private-sector borrowing conditions.  Options include: existence of strongly capitalized banks; policies that may offset higher sovereign risk premia; and the availability of extra funds to provide liquidity.

 

Fiscal austerity is a necessary condition to bring down deficits and reduce sovereign risk.  However, in certain cases of high sovereign risk, austerity may have unintended consequences and other options are needed to contain sovereign risk premia and/or limit the impact on broader economic conditions.

 

As with risk management, conventional policies may not always produce the desired results.  Do you have this problem?   

 

For more on this follow the link: www.voxeu.org/index.php?q=node/7642