Turing Test

By Rick Nason, PhD, CFA 
Partner, RSD Solutions Inc. 

The British mathematician, World War II code breaker, and one of the 
Grandfathers of the computer developed the Turing Test.  In the Turing Test, 
a person stands before two curtains.  Behind one curtain is a computer.  
Behind the second curtain is another human.  The Turing Test is whether the 
human in front of the curtains can tell which curtain the computer is behind. 

Risk departments for a variety of reasons are becoming more and more 
computerized as more and more risk analytics are deemed necessary.  However 
is your analytics heavy risk management system smart enough to pass for a 
human?  Is your risk management analytics setup smart enough that you only 
need humans solely to feed it data?  Is your Board hoping that the risk 
management "brain" of the company passes a Turing Test?  Or is no one 
thinking of asking this question?  (What are the implications of not asking 
this question?)

Customers

by Rick Nason, PhD, CFA 
Partner, RSD Solutions Inc. 

All good business units put a focus on the customer.  Who is risk 
management's customer (customers)?  What keeps that customer(s) happy?  
What do the customers value?  If risk management is a business, what is the 
ROA of that business?

Unscripted

 

By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.

Risk management procedures are a script; a set of decision trees.  Dodd
Frank and Basle III are the ultimate scripts, in which no stage direction is
left for the actor to interpret.    However do you think the Gods of risk
use a script? 

Problems are unscripted.  Issues are unscripted.  Danger is unscripted. 
Opportunities are unscripted. 

Are your risk managers acting according to script?