*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
How many risk managers does it take to change a light bulb? The straight
answer to this traditional joke setup is probably too many (and likely way
too many regulators).
There is a version of this old joke that you have probably heard many times
before. "How many psychologists does it take to change a light bulb?"
The punch line is "one, but the bulb has to want to change". In risk
consulting we are often asked about changing the risk culture of a firm.
There are many excellent ways to go about doing so, but the factual and
non-funny answer is that the firm must first want to change its risk culture.
The sad reality is that many firms do not want a risk culture, much less
change their existing risk culture (except to eliminate whatever risk
management they have in practice). All change however must first be
preceded by a willingness to change, and this is especially true for risk
culture.
[1] https://twitter.com/rsdsolutions
Friday, July 4, 2014
Thursday, July 3, 2014
Risk Experience
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
Many corporations spend a lot of time focusing on the customer experience,
and rightly so. Think of Starbucks, McDonalds, Mercedes Benz, or Disney.
The experience is often more important than the actual product. In your
organization, what is the risk experience? What is the risk experience of
the employees, the Board, the suppliers, the customers, the regulators, the
investors or even society at large?
[1] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
Many corporations spend a lot of time focusing on the customer experience,
and rightly so. Think of Starbucks, McDonalds, Mercedes Benz, or Disney.
The experience is often more important than the actual product. In your
organization, what is the risk experience? What is the risk experience of
the employees, the Board, the suppliers, the customers, the regulators, the
investors or even society at large?
[1] https://twitter.com/rsdsolutions
Wednesday, July 2, 2014
Diversity
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
Diversity is a major topic in corporations and in society at large. We
recognize the importance and value of diversity for many reasons. In risk
management I see many institutions that have a problem with risk diversity.
The problem is not that risk management does not hire people with racial or
gender diversity though. The problem is intellectual diversity. More and
more staff in risk management departments all have similarities in training,
certifications, and mindsets. Racial and gender diversity is important, but
intellectual diversity is also important – and especially important in risk
management.
[1] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
Diversity is a major topic in corporations and in society at large. We
recognize the importance and value of diversity for many reasons. In risk
management I see many institutions that have a problem with risk diversity.
The problem is not that risk management does not hire people with racial or
gender diversity though. The problem is intellectual diversity. More and
more staff in risk management departments all have similarities in training,
certifications, and mindsets. Racial and gender diversity is important, but
intellectual diversity is also important – and especially important in risk
management.
[1] https://twitter.com/rsdsolutions
Tuesday, July 1, 2014
Distributions
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
Distributions play a central role in risk management. We look at
distributions to calculate Value at Risk, Credit Risk, Foreign Exchange Risk,
Cash Flow Risk etcetera, etcetera, etcetera. It is all part of the
increasing quantification and measurement of risk and risk exposures.
However what we sometimes forget (perhaps conveniently) is that most of the
really important risks such as Strategic Risk, Reputational Risk, Paradigm
Shifting Risk, Cyber Risk or Catastrophic Risk do not have convenient
distributions. The wise risk manager respects distributions but also
respects the limits of distributions – especially where they do not apply.
[1] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
Distributions play a central role in risk management. We look at
distributions to calculate Value at Risk, Credit Risk, Foreign Exchange Risk,
Cash Flow Risk etcetera, etcetera, etcetera. It is all part of the
increasing quantification and measurement of risk and risk exposures.
However what we sometimes forget (perhaps conveniently) is that most of the
really important risks such as Strategic Risk, Reputational Risk, Paradigm
Shifting Risk, Cyber Risk or Catastrophic Risk do not have convenient
distributions. The wise risk manager respects distributions but also
respects the limits of distributions – especially where they do not apply.
[1] https://twitter.com/rsdsolutions
Monday, June 30, 2014
Design
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
How many designers does your risk department have? None you say! How much
of the curriculum of risk programs is based on design factors? Next to none
you respond! When was the last time someone said "I really like the
design of this risk tool." Are you now laughing?
To be useful, risk systems must be used, and furthermore they must be seen as
being easy to use. A lack of focus on design leads to clumsy risk systems
and practices that go underutilized. A little design can go a long way
towards the success and uptake of anything – and this includes risk
management.
[1] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
How many designers does your risk department have? None you say! How much
of the curriculum of risk programs is based on design factors? Next to none
you respond! When was the last time someone said "I really like the
design of this risk tool." Are you now laughing?
To be useful, risk systems must be used, and furthermore they must be seen as
being easy to use. A lack of focus on design leads to clumsy risk systems
and practices that go underutilized. A little design can go a long way
towards the success and uptake of anything – and this includes risk
management.
[1] https://twitter.com/rsdsolutions
Tuesday, June 24, 2014
Ethical Leadership
*/By Rick Nason, PhD, CFA,
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
/(Repost of blog from May 21, 2010)/
The new Dean at my university (Dalhousie University in Halifax, Canada) is
Peggy Cunningham. We are all very excited about having Dr. Cunningham lead
us as we build on some very exciting projects and some new themes in the
Faculty of Management at Dalhousie.
One of the most exciting themes is that of Ethical Leadership. Now if you
are like me you probably rolled your eyes when you read that line about
"ethical leadership". "Here we go", you are thinking, "another
school that is going to hop on the bandwagon by teaching students right from
wrong!"
Dr. Cunningham (Peggy as she likes to be called) is too smart and more
importantly too wise for that. Like me (see my previous blogs) I suspect
she believes that right from wrong is not something that can be taught to
someone who is past 6 years of age (although I have not discussed this
specific point with her.)
Ethical leadership for Dr. Cunningham is leadership with (a) respect, (b)
courage, and (c) empathy. To me that is a very refreshing and encouraging
way of looking at ethics and ethical leadership.
Let's quickly examine this definition of ethical leadership in the context
of the ethical issue of the day – namely Goldman Sachs and the Senate
review that occurred recently. Most of you have read the transcripts or
seen part of the testimony of the Goldman executives before the review
committee. Probably more of you spent time trolling the various joke sites
and e-mails making light of the hearings.
In any case, let's examine these hearings in terms of ethical leadership.
Who was showing respect? Was there any respect in any part of the incident
(the Abacus transaction, or the review hearings)? Was there respect shown
by those who made fun of the hearings? (In the interest of full disclosure
I am certainly chuckling at the jokes that are still circulating around.)
Was there respect shown by either the executives of Goldman Sachs or by
members of the review committee or by the various protesting groups? Was
there respect shown by the counterparties to the original transaction?
Who has demonstrated courage in this whole affair? Is it the SEC who
brought the charges (although we understand there was significant debate
about whether or not they should, and there are suspicions that the charges
may be politically motivated)? Who is being courageous?
Who has demonstrated empathy? Surely to goodness you are not going to reply
the Senate committee members as they empathize with the counterparties who
lost on the transaction (the same counterparties that they would have been
praising for being courageous for helping to grease the housing boom, or
courageous for taking risks to finance profits etc. etc.).
The world of risk management is rife with opportunities where ethical
leadership is called for. Think about situations that you have been involved
in. Are you demonstrating "ethical leadership"? Are the principles of
leadership with (a) respect, (b) courage and (c) empathy part of the social
fabric of your organization? Are they part of your personal make-up?
In an earlier blog I stated quite emphatically that I do not believe that
ethics (teaching of right from wrong) can be taught to anyone over the age of
six. What I do believe is that ethical leadership can be */inspired/* in
people. I also believe that most of us */want/* to be inspired to be
ethical leaders. In this age of the cynical sound bite, ethical leadership
just might become the new black. I hope so.
[1] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
/(Repost of blog from May 21, 2010)/
The new Dean at my university (Dalhousie University in Halifax, Canada) is
Peggy Cunningham. We are all very excited about having Dr. Cunningham lead
us as we build on some very exciting projects and some new themes in the
Faculty of Management at Dalhousie.
One of the most exciting themes is that of Ethical Leadership. Now if you
are like me you probably rolled your eyes when you read that line about
"ethical leadership". "Here we go", you are thinking, "another
school that is going to hop on the bandwagon by teaching students right from
wrong!"
Dr. Cunningham (Peggy as she likes to be called) is too smart and more
importantly too wise for that. Like me (see my previous blogs) I suspect
she believes that right from wrong is not something that can be taught to
someone who is past 6 years of age (although I have not discussed this
specific point with her.)
Ethical leadership for Dr. Cunningham is leadership with (a) respect, (b)
courage, and (c) empathy. To me that is a very refreshing and encouraging
way of looking at ethics and ethical leadership.
Let's quickly examine this definition of ethical leadership in the context
of the ethical issue of the day – namely Goldman Sachs and the Senate
review that occurred recently. Most of you have read the transcripts or
seen part of the testimony of the Goldman executives before the review
committee. Probably more of you spent time trolling the various joke sites
and e-mails making light of the hearings.
In any case, let's examine these hearings in terms of ethical leadership.
Who was showing respect? Was there any respect in any part of the incident
(the Abacus transaction, or the review hearings)? Was there respect shown
by those who made fun of the hearings? (In the interest of full disclosure
I am certainly chuckling at the jokes that are still circulating around.)
Was there respect shown by either the executives of Goldman Sachs or by
members of the review committee or by the various protesting groups? Was
there respect shown by the counterparties to the original transaction?
Who has demonstrated courage in this whole affair? Is it the SEC who
brought the charges (although we understand there was significant debate
about whether or not they should, and there are suspicions that the charges
may be politically motivated)? Who is being courageous?
Who has demonstrated empathy? Surely to goodness you are not going to reply
the Senate committee members as they empathize with the counterparties who
lost on the transaction (the same counterparties that they would have been
praising for being courageous for helping to grease the housing boom, or
courageous for taking risks to finance profits etc. etc.).
The world of risk management is rife with opportunities where ethical
leadership is called for. Think about situations that you have been involved
in. Are you demonstrating "ethical leadership"? Are the principles of
leadership with (a) respect, (b) courage and (c) empathy part of the social
fabric of your organization? Are they part of your personal make-up?
In an earlier blog I stated quite emphatically that I do not believe that
ethics (teaching of right from wrong) can be taught to anyone over the age of
six. What I do believe is that ethical leadership can be */inspired/* in
people. I also believe that most of us */want/* to be inspired to be
ethical leaders. In this age of the cynical sound bite, ethical leadership
just might become the new black. I hope so.
[1] https://twitter.com/rsdsolutions
Thursday, June 12, 2014
Gods Laughing
*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
There is an old saying that "if you want to hear the Gods laughing, just
tell them your plans". The Gods in particular think risk is funny.
[1] https://twitter.com/rsdsolutions
Partner, RSD Solutions Inc./*
*/Follow us on Twitter/* [1]
There is an old saying that "if you want to hear the Gods laughing, just
tell them your plans". The Gods in particular think risk is funny.
[1] https://twitter.com/rsdsolutions
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