Friday, August 9, 2013
Gardens Not Buildings
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/FOLLOW US ON TWITTER [1]/*
I am going to steal yet another idea from Seth Godin. (I get my ideas and
inspiration from wherever I can – not a bad mindset for risk managers to
adopt). Last week, Mr. Godin posted a blog called Gardens Not Buildings.
The link is here.
http://sethgodin.typepad.com/seths_blog/2013/07/gardens-not-buildings.html
[2]
Paraphrasing the article, Godin compares the engineering and rigidity that
goes into a creating a building, while a garden grows, evolves and develops a
personality over time.
I believe that in risk management we are way too focused on building what we
foolishly and misguidedly hope is permanent buildings of risk processes,
procedures and regulations. In contrast I believe it is much more
productive to let risk management procedures be more organic – much like
gardens.
Buildings collapse, gardens don't.
[1]
http://twitter.com/intent/follow?original_referer=https://twitter.com/about/resources/buttons&region=follow_link&screen_name=RSDsolutions&tw_p=followbutton&variant=2.0
[2]
http://sethgodin.typepad.com/seths_blog/2013/07/gardens-not-buildings.html
Wednesday, August 7, 2013
Risk Equals Happy
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
A friend of mind with a very sharp and eclectic mind (the best type of
friends to have) sent me an article from the July issue of Psychology
Today. The article entitled "What Happy People Do Differently [1]" was
authored by Robert Biswas-Diener and Todd Kashdan.
One of the key points of the article is that happy people explore outside of
their comfort zones. In other words, there are "real rewards of
risk". While we can have a debate about whether or not corporations are
psychologically capable of happiness (or even what that would mean), I
believe the central tenet of the article holds for corporations as well as
individuals; namely there are real benefits to taking risks.
Anyone who reads my blogs regularly knows that I am a huge proponent of risk
as being viewed as two sided – that is there is good risk and bad risk, and
risk management involves managing both types of risk. With this mindset
there are real benefits of risk.
Individuals who do not take chances tend to live boring and unhappy lives –
basically the premise of the Psychology Today article. Likewise
organizations that do not take risks produce boring and relatively mediocre
profits.
However there may be another even more significant (bad) risk lurking within
corporations that do not want to take risks – namely the risk that risk
averse corporations attract unhappy risk averse employees.
[1]
http://www.psychologytoday.com/articles/201306/what-happy-people-do-differently
Partner, RSD Solutions Inc./*
A friend of mind with a very sharp and eclectic mind (the best type of
friends to have) sent me an article from the July issue of Psychology
Today. The article entitled "What Happy People Do Differently [1]" was
authored by Robert Biswas-Diener and Todd Kashdan.
One of the key points of the article is that happy people explore outside of
their comfort zones. In other words, there are "real rewards of
risk". While we can have a debate about whether or not corporations are
psychologically capable of happiness (or even what that would mean), I
believe the central tenet of the article holds for corporations as well as
individuals; namely there are real benefits to taking risks.
Anyone who reads my blogs regularly knows that I am a huge proponent of risk
as being viewed as two sided – that is there is good risk and bad risk, and
risk management involves managing both types of risk. With this mindset
there are real benefits of risk.
Individuals who do not take chances tend to live boring and unhappy lives –
basically the premise of the Psychology Today article. Likewise
organizations that do not take risks produce boring and relatively mediocre
profits.
However there may be another even more significant (bad) risk lurking within
corporations that do not want to take risks – namely the risk that risk
averse corporations attract unhappy risk averse employees.
[1]
http://www.psychologytoday.com/articles/201306/what-happy-people-do-differently
Monday, August 5, 2013
What or Why Risk Training
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
Risk training is obviously a hot topic at the moment. It has certainly kept
us busy here at RSD Solutions. Before you design your next risk training
interaction I would like to point out a few of the differences between
"What" focus training, and "Why" focus training.
"What" focused training tells the participants what has to be done, while
"Why" focused training gets participants to understand the reasons for
why.
A "What" focus to training produces participants who are capable of doing
things. A "Why" focus produces participants who can do things but also
understand why. Understanding why to do things provides the knowledge to
know when the rules or procedures will be broken – and there will be times
when a rule or procedure will need to be broken.
A "What" focus is not engaging. A "Why" focus engages the
participants. Engaged participants become engaged employees. Engaged
employees have several benefits including more buy in to risk culture and
strategy and a ground level source of risk improvement ideas to name just two
benefits.
A "What" focus produces knowledge. A "Why" focus produces wisdom.
A "What" focus produces stasis. A "Why" focus produces risk growth.
So what's your training focus?
Partner, RSD Solutions Inc./*
Risk training is obviously a hot topic at the moment. It has certainly kept
us busy here at RSD Solutions. Before you design your next risk training
interaction I would like to point out a few of the differences between
"What" focus training, and "Why" focus training.
"What" focused training tells the participants what has to be done, while
"Why" focused training gets participants to understand the reasons for
why.
A "What" focus to training produces participants who are capable of doing
things. A "Why" focus produces participants who can do things but also
understand why. Understanding why to do things provides the knowledge to
know when the rules or procedures will be broken – and there will be times
when a rule or procedure will need to be broken.
A "What" focus is not engaging. A "Why" focus engages the
participants. Engaged participants become engaged employees. Engaged
employees have several benefits including more buy in to risk culture and
strategy and a ground level source of risk improvement ideas to name just two
benefits.
A "What" focus produces knowledge. A "Why" focus produces wisdom.
A "What" focus produces stasis. A "Why" focus produces risk growth.
So what's your training focus?
Friday, August 2, 2013
Personality
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc/*
There are a whole lot of talks, seminars, training courses, articles and
great thoughts about risk culture. Culture can generally be described as
the social norms of the group. In other words it is the usual behavior of a
group given the context. Similar to, but subtly different from culture is
personality. Personality, like culture, is a set of usual traits or
responses to a given context, but personality implies a more pliable and
flexible response. A personality may change from day to day, while culture
changes slowly. Personality is sometimes unpredictable, while culture is
almost completely predictable. Personality has swings – culture does not
swing (except maybe in the 30's).
So in the final analysis should your organization worry about developing its
risk culture or should it worry about developing its risk personality?
Partner, RSD Solutions Inc/*
There are a whole lot of talks, seminars, training courses, articles and
great thoughts about risk culture. Culture can generally be described as
the social norms of the group. In other words it is the usual behavior of a
group given the context. Similar to, but subtly different from culture is
personality. Personality, like culture, is a set of usual traits or
responses to a given context, but personality implies a more pliable and
flexible response. A personality may change from day to day, while culture
changes slowly. Personality is sometimes unpredictable, while culture is
almost completely predictable. Personality has swings – culture does not
swing (except maybe in the 30's).
So in the final analysis should your organization worry about developing its
risk culture or should it worry about developing its risk personality?
Thursday, August 1, 2013
Formalism
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc/*
There are many problems with risk management being a process. (There are
also many advantages with risk management being process based.) One of the
often overlooked problems is that a process creates groupthink. It is hard
to be creative, to have different ideas, to develop a new paradigm or to see
the flip side if one is spending time and energy adhering to the corporate
risk manual.
Partner, RSD Solutions Inc/*
There are many problems with risk management being a process. (There are
also many advantages with risk management being process based.) One of the
often overlooked problems is that a process creates groupthink. It is hard
to be creative, to have different ideas, to develop a new paradigm or to see
the flip side if one is spending time and energy adhering to the corporate
risk manual.
Wednesday, July 31, 2013
Statistically Valid Noise
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc/*
When I am wearing my academic hat – as opposed to my consulting hat – I
get so exasperated by my academic colleagues who willfully and purposefully
ignore a model or an idea, or conversely adopt a model or an idea, solely
based on the data available.
As an example I had a colleague say to me today, "yes, we considered that
but we could only get 20 years of data and for our model to be statistically
valid we need at least twice as much data so we dropped that variable."
I think every academic has heard (or said, or thought) something to that
effect in their career. The reality is that you do need data to get
results. However if you need so much data for statistical significance,
then perhaps you should consider if you are measuring a model or just
measuring noise. That is what I love about risk managers (and regulators)
– they never make that mistake!
Partner, RSD Solutions Inc/*
When I am wearing my academic hat – as opposed to my consulting hat – I
get so exasperated by my academic colleagues who willfully and purposefully
ignore a model or an idea, or conversely adopt a model or an idea, solely
based on the data available.
As an example I had a colleague say to me today, "yes, we considered that
but we could only get 20 years of data and for our model to be statistically
valid we need at least twice as much data so we dropped that variable."
I think every academic has heard (or said, or thought) something to that
effect in their career. The reality is that you do need data to get
results. However if you need so much data for statistical significance,
then perhaps you should consider if you are measuring a model or just
measuring noise. That is what I love about risk managers (and regulators)
– they never make that mistake!
Tuesday, July 30, 2013
J. Tukey
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc/*
Just a quote from J. Tukey.
"Far better an approximate answer to the right question, which is often
vague, than an exact answer to the wrong question, which can always be made
precise"
Partner, RSD Solutions Inc/*
Just a quote from J. Tukey.
"Far better an approximate answer to the right question, which is often
vague, than an exact answer to the wrong question, which can always be made
precise"
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