Relatively Smart Guy

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

There once was a relatively smart guy who said quite a few smart things. 
You may have heard of him.  His name was Albert Einstein.  Once, when asked
how he came up with relativity, Einstein responded "I questioned an
axiom". 

In risk management we also have lots of axioms – although we do not always
characterize them as such.  We just assume that some things are true –
like more risk management is better, more regulation is better, more
quantitative analysis is better, more processes are better, etc.

Perhaps it is time, like Einstein, that we as a profession started to
question some axioms.

Risk Audits

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

I have always maintained that auditing is not risk management and conversely
risk management is not auditing.  However, I do believe it makes sense to do
an audit of risk management.  By this I do not mean to do an audit to make
sure risk management processes are being followed – that would be
traditional auditing of business operations.  Instead do an audit of risk
procedures themselves.  Audit based on the question "Is this the right
risk procedure to do?"  That might make for a much more interesting audit.

Messy

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

Playing rugby on a muddy field is messy.  Risk issues are like a muddy rugby
pitch.  If you expect your risk management processes to be clean and
surgical like, then that is like the rugby player with no stains on their
uniform.  It means you are either simply warming the bench, or on the field
and avoiding the action.