Risk Education

*/by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc/*

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There is a lot of popular support for introducing more financial education
into the public school system.  While I in principle agree with that
(although I wonder what you take out to make room for it), I would like to
propose that perhaps first we should introduce risk education into the school
system.

An understanding of risk is key for virtually all areas of business and most
areas of our daily lives.  An understanding of risk and decision making is
also key to understanding geopolitical events and macro issues such as
climate warming, fracking and basic economics.  Understanding risk is also
key in many personal issues such as making choices about medical care, or
even career choices.  Additionally understanding risk is also key to
understanding financial issues.

Think about how the media would present stories involving the major issues of
the day if more people had a better understanding of risk.  Imagine how the
politicians would have to change their messaging strategies if they knew they
would be called out if they tried to mislead through faulty risk logic. 
Imagine what would happen to the role of regulators if there was a greater
general understanding of risk.  Having a risk educated populous just might
change things for the better.  (And along the way I suspect all would also
be naturally better financial decision makers.)


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Risk is Good

*/by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc/*

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I have written a lot about how we need to view risk as "the possibility
that bad or good things may happen".  Risk is two sided – there is good
risk, and there is bad risk.  There are a lot of reasons why this definition
should be used, and there are a lot of reasons why risk is most commonly
defined as "bad things happening".

To counteract this, perhaps it is time to swing the pendulum too far the
other way in hopes of getting a result closer to the middle.  Thus I propose
that you go an entire week only thinking about the good side of risk.

In that spirit I will get us started:

·       It might be sunnier this week than expected

·       I might write more grammatically correct sentences than usual

·       More people than usual will think of risk management as the
"Department of How to Do it Better" rather than the "Department of
No"

·       Financial markets might move in our favour

·       Cash flow might be more positive than expected

·       Accounts Receivable might be collected faster than projected

·       The company's public reputation might receive an unexpected
boost

·       Stakeholder satisfaction might soar

Feel free to add your own items to the list ….


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100 Most Creative People

*/by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc/*

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The Most Creative People in Business issue of Fast Company is currently on
the newsstands.  It is one of my favorite issues of one of my favorite
magazines.  Browsing through it I immediately noticed that there were no
people with the title of risk manager listed.  I did not check "Most
Creative People" issues from previous years, but I suspect that there has
never been a risk manager named to the annual list. 

I believe that risk management is a creative field.  However with the
proliferation of regulation and frameworks it has become a field of
compliance rather than creativity.  That is simply not good.

Looking through the Most Creative People issue of Fast Company, and reading
the profiles, achievements, and mindsets of the individuals listed, one
quickly realizes that each of them is actually practicing risk management in
their own way, and each of them has become successful because of their risk
management skills – even though they are in professions very different from
risk management.

Good risk management and creativity go hand in hand.  Hopefully soon, a risk
manager will be cited as one of the most creative people in business.


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