Are People Numbers?

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

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Are people numbers?  You might be insulted by the question.  If I think of you as just a number, then the implication is that I don’t care about you, or that I am treating you as just a generic blob.  Companies go to great lengths in their advertising to ensure us (their customers) that we are not being treated as a number.  I think we can all agree that people are so much more than just mere numbers and as such they cannot be reduced to a number.

Changing gears a bit, how much of your risk management is based on numbers?  Put another way, how well would your risk management system function without numbers?  I suspect hat risk management at your firm would cease to exist in its current form if it had to operate without numbers.

Let’s shift gears a little bit more.  The vast majority of risks are caused by people being people.  Anyone else see an issue here?  Risk is caused by people but managed by numbers which are not a good representation of people.  Hmmmm.

Everybody is Right

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

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In his bestselling book "Zero to One:  Notes On Startups Or How To Build the Future", Paypal co-founder and tech entrepreneur Peter Thiel says he likes to ask the interview question “What important truth do very few people agree with you on?”  It is an interesting question and one that I have had an opportunity to use in several different types of interviews. 

I recently asked it at a risk management workshop that I was conducting.  I asked it in the context of what are some of the accepted “truths” in risk management that everyone believes but in fact may be wrong.  The response was silence. 

There are several possible explanations for the silent response.  A very real one may be that no one dared to risk their professional status to speak up and admit that they had a deviation from the accepted wisdom of the crowd.  (A worthy thought for a future post.)  Another reason however may be that we are too lazy to think about alternatives to current practice.  (Again, a potential future post.) 

However perhaps the reason was even simpler and more basic – no one had ever thought to ask the question “what is it that everyone believes that might be wrong?”!

Bluenose

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

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If you have ever been really bored and examined the back of a Canadian dime you have seen a rendering of the sailing ship The Bluenose.  The Bluenose is (was) the pride of Nova Scotia.  During the early 1900’s when sailing schooners were the elite of the shipping and fishing world, the Bluenose was a remarkable vessel.  Not only was it a working fishing vessel, it was also the fastest sailboat of its kind.  (Let’s see Larry Ellison’s sailboat bring home a catch of fish!)

As with all things, progress led to the demise of the working schooner and the Bluenose sunk after hitting a reef near Haiti while hauling a load of bananas.  To commemorate the world beating achievements of the Bluenose (and, admittedly, to capture tourist dollars) the construction of a replica was commissioned. 

Unfortunately the fate of The Bluenose II has not been as positively illustrious as its famous ancestor.  To begin there were a variety of legal disputes and then cost overruns on the construction.  The biggest hurdle however was that the ship was required to get a steel rudder in order to be classified as sea worthy by an American classification agency.  More than one seasoned shipbuilder called the requirement ridiculous.  In essence regulation was stating that the original design of the ship was a dud and needed to be redesigned.  Slight problem – the original design of the ship was not set up for a steel rudder.

Long story short, The Bluenose II had to be taken out of service earlier this week due to problems in part caused by the steel rudder.  Just another case of well intentioned regulation really mucking things up.  I suspect the original Bluenose had no accreditation or regulatory inspections except for the fact that it was not only the fastest but one of the hardest working ships of it era.