*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
My wife has many lovely qualities and is a very smart woman. An economist
however she is not. Therefore I was somewhat amused when after listening to
the report of how Statistics Canada totally botched the July Jobs report –
a key economic indicator. When the report was initially released the
announcement was that Canada had added a measly 200 jobs. The market
reacted to the totally unexpected number. It subsequently turned out that
the real number (after fixing computer and human error) was a plus 41,700
jobs. In an economy the size of Canada's that is a major difference.
When my wife was listening to this on the news she turned to me and said
"you would think that someone with some common sense would have caught
that".
Yes, you naturally would think that at first blush, but it is all too easy to
see why it would not get caught.
Firstly if a number comes out of a black box we sometimes erroneously assume
it must be correct. Most people reporting economic numbers (or risk
numbers) do not have any clue as to how to actually calculate the numbers by
hand. We rely on the computers and in the process lose an intuitive
"feel" for the numbers.
Secondly the emphasis these days is on people who are university educated
rather than market educated. As a University Professor I am not going to
knock a University education, but even I will acknowledge that a University
education should only be the start of your real education. Degrees and
certification do not and cannot replace market experience.
All too often these days, the people calculating the numbers have no idea how
to interpret them or develop a "feel" for them. Likewise, the people
who use and understand the numbers, all too often do not have an idea of how
to calculate them. This is true in economics and it is especially true in
risk management.
Therefore, unfortunately it is all too easy to see how such an embarrassing
mistake could occur. But it does make you think …
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Thursday, September 18, 2014
Wednesday, September 17, 2014
CF18s
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
You likely heard the story about the Sunwing charter that was on its way from
Toronto to Cuba had to divert back to Toronto more than half-way through its
flight and "needed" a CF18 escort to do so. The issue was two young
ladies who got into their holiday junket liquor a little too hard and a
little too early.
I understand getting the plane to the ground and offloading the offending
passengers. I also believe that most rational people would also consider
the CF18 fighter jets to be a bit of a safety overkill. My issue / question
is what would the CF 18 jets do?
There was no indication that the stupid drunken vacationers were either
wanting to, or able to take down the plane. Also there was no indication
that they wanted to crash the plane into a crowded area. Nor were they
trying to hijack it. They were simply drunken ninnies. SO what was the
point of the CF18 escort, and what was the expected CF18 escort expected to
do if a worst case did occur. "Roger, we got that – they're trying to
open up another bottle of Jack Daniels – we will fire at once!"
There are only two plausible explanations. (1) Risk management at NORAD has
also been into the Jack Daniels too hard and too heavy, or (2) risk
management at NORAD is desperate for something to do in order to justify its
budget.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
You likely heard the story about the Sunwing charter that was on its way from
Toronto to Cuba had to divert back to Toronto more than half-way through its
flight and "needed" a CF18 escort to do so. The issue was two young
ladies who got into their holiday junket liquor a little too hard and a
little too early.
I understand getting the plane to the ground and offloading the offending
passengers. I also believe that most rational people would also consider
the CF18 fighter jets to be a bit of a safety overkill. My issue / question
is what would the CF 18 jets do?
There was no indication that the stupid drunken vacationers were either
wanting to, or able to take down the plane. Also there was no indication
that they wanted to crash the plane into a crowded area. Nor were they
trying to hijack it. They were simply drunken ninnies. SO what was the
point of the CF18 escort, and what was the expected CF18 escort expected to
do if a worst case did occur. "Roger, we got that – they're trying to
open up another bottle of Jack Daniels – we will fire at once!"
There are only two plausible explanations. (1) Risk management at NORAD has
also been into the Jack Daniels too hard and too heavy, or (2) risk
management at NORAD is desperate for something to do in order to justify its
budget.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Friday, July 18, 2014
Risk Hugs
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
No doubt you have seen the bumper stickers, "Have you hugged your kid
today?" A nice sentiment and one we likely all need to be reminded of
more frequently.
We should also remember that in risk management we need to hug (that is
embrace) our risks as well. I am tired and frustrated at seeing article
after article on risk management stating that the responses to risk are: (1)
eliminate, (2) mitigate or (3) accept. We have to remember that some risks
should be embraced and enhanced. Risks can be good or bad. Good risks
need to be embraced, or else they will grow to be adults that have no use for
their parents.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
No doubt you have seen the bumper stickers, "Have you hugged your kid
today?" A nice sentiment and one we likely all need to be reminded of
more frequently.
We should also remember that in risk management we need to hug (that is
embrace) our risks as well. I am tired and frustrated at seeing article
after article on risk management stating that the responses to risk are: (1)
eliminate, (2) mitigate or (3) accept. We have to remember that some risks
should be embraced and enhanced. Risks can be good or bad. Good risks
need to be embraced, or else they will grow to be adults that have no use for
their parents.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Thursday, July 17, 2014
Paraphrasing Eisenhower
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
What counts is not the size of the risk management system; it's the size of
the management in the risk system.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
What counts is not the size of the risk management system; it's the size of
the management in the risk system.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Wednesday, July 16, 2014
Oh No, Another Einstein Quote
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
I think Einstein might have been inspired to state the quote below after
touring various companies' risk departments.
"The intuitive mind is a sacred gift and the rational mind is a faithful
servant. We have created a society that honors the servant and has
forgotten the gift."
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
I think Einstein might have been inspired to state the quote below after
touring various companies' risk departments.
"The intuitive mind is a sacred gift and the rational mind is a faithful
servant. We have created a society that honors the servant and has
forgotten the gift."
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Tuesday, July 15, 2014
Communication
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
As a university professor I assign readings to my students and they dutifully
attend my lectures and take notes (or at least most of them do). There is a
lot of communication (hopefully not perceived as all one way) between a
professor and the students. However as any random exam result shows, there
is a bog difference between communication and understanding.
In recent years the amount of communication between companies and their
stakeholders on risk issues has increased dramatically. However we should
never confuse volume of communication with volume of understanding.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
As a university professor I assign readings to my students and they dutifully
attend my lectures and take notes (or at least most of them do). There is a
lot of communication (hopefully not perceived as all one way) between a
professor and the students. However as any random exam result shows, there
is a bog difference between communication and understanding.
In recent years the amount of communication between companies and their
stakeholders on risk issues has increased dramatically. However we should
never confuse volume of communication with volume of understanding.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Monday, July 14, 2014
Chicken Soup
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
If you had a similar upbringing to mine, it is likely that when you got the
cold or the flu that your mother would make you chicken soup. Chicken soup
tastes good, and especially good when you are not feeling well. The medical
evidence is rather mixed on whether or not chicken soup actually helps cure a
cold or a flu, but the traditional wisdom was that it had significant
curative effects.
The point of this blog is that many risk protocols are like chicken soup.
Their effectiveness may be highly questionable but we cling to them because
the taste make us feel good. However we must never confuse feeling good
with being cured.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow Rick Nason on Twitter/* [1]
*/Follow RSD Solutions on Twitter/* [2]
If you had a similar upbringing to mine, it is likely that when you got the
cold or the flu that your mother would make you chicken soup. Chicken soup
tastes good, and especially good when you are not feeling well. The medical
evidence is rather mixed on whether or not chicken soup actually helps cure a
cold or a flu, but the traditional wisdom was that it had significant
curative effects.
The point of this blog is that many risk protocols are like chicken soup.
Their effectiveness may be highly questionable but we cling to them because
the taste make us feel good. However we must never confuse feeling good
with being cured.
[1] https://twitter.com/rnason_dal
[2] https://twitter.com/rsdsolutions
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