By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
Partner, RSD Solutions Inc.
I am currently reading
the very interesting biography of Benoit Mandelbrot, “The Fractalist”. Mandelbroit had a very atypical mathematical
career that enabled him to create the field of fractals and chaos theory. I highly recommend the book as it has many
ideas that are very relevant to risk management.
In particular there was
one line that struck me as written specifically for risk management: “Being
ill-defined is a feature to all important concepts”. Many aspects of risk management are
ill-defined – despite our best efforts to make them concretely defined, or our
best efforts to ignore the fact that they are ill-defined.
If we are to be
effective risk managers, we need to embrace the ill-defined nature of our
field, not to be scared of it.
