Friday, February 27, 2015
All Are Not Equal
All risks are not equal. Some opportunities have bigger potential than
others, and some losses are potentially more disastrous than others. Treating all risks with the equal amount of
time, energy and effort is not smart, nor is it effective. All are not equal.
Wednesday, February 25, 2015
Risk Curation
We live in a time when we are awash with information. The internet, our Twitter feeds, our email,
our Facebook, our Linked-In feeds etc. etc. bombard us with a non-stop
information torrent. So much so that we
intentionally ignore so much of our information flow that we actually might be
receiving less information than we did in the pre-internet / pre-social media
era. Additionally so much of the
information we receive is incomplete, biased, misleading, half-baked or simply
wrong. Many media pundits argue that the
new role of respected media is not news reporting but news curation – sorting
the wheat from the chaff and presenting the stream of information in the most
useful manner possible.
In today’s business environment, the manager is also awash in an
information torrent. In certain
industries such as financial services, a lot of the flow is risk based. Without proper curation the manager is at
risk for actually being less informed about the relevant risks of their unit
than they were thirty years ago when such information was much rarer and much
harder to sort. Thus a key role of the
risk department is to act as the curator of risk information.
Risk information is key to good risk management,
but it is the right information at the right time that is necessary.
Monday, February 23, 2015
Man and Machine
Big data is everywhere, and risk management is
no exception. Big data in a nutshell is
nothing more than allowing computers to crunch numbers to see patterns that
might escape the human. It is data
analysis that may or may not have been done by a human, now being done by
computer. Of course lots of other tasks
formerly done by humans are being done by computers or by robots. Indeed, many tasks in risk management are now
done at least partially by computer – for instance credit analysis, fraud
detection, human resources, stress testing, etc. etc. This is not news, but the spread of computers
into white-collar tasks is quite threatening to many. However it must be realized, particularly in
risk management, that there are things that a human can do, that a machine
cannot do. It is not man or machine, but
man and machine.
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