A major challenge in dealing with Risk & Uncertainty is the prevalence of bad practices...
We must proactively crush many of today's practices before we can move on to improved practices. We tackle many of today's belief systems head-on. It often takes a new generation to reverse belief systems – so we may literally have to wait for the old belief systems to die off.
We must proactively insert new ways of thinking (e.g., tacit knowledge+ + +
There is just one compulsory program for both evidence gathering and the Management of Risk & Uncertainty. Much of the management of risk and uncertainty come though our evidence gathering practices. However, the compulsories for Risk & Uncertainty are so challenging they deserve separate treatment.
Expand all | Collapse all We lack a robust academic discipline to guide our thinking about discontinuous discovery
In fact we will be challenged by several centuries of study that go against the contentions of discontinuous discovery (e.g., statistics). Quantitative reasoning has been on the ascendancy over the last few centuries in academia. We intend to replace that bias with behavioral reasoning: the behavior fundamentals. We look to the behaviors of individuals to manage risk and uncertainty in investments, and this means we manage their motivations, biases and insecurities. We are careful not to open a back door to quantitative reasoning in our behavioral reasoning (i.e., quantitative approaches to behaviors). We rely greatly on trial and error+
There are two major hurdles to the introduction of these compulsories: the buyers and the sellers of today’s risk assessments
Buyers find comfort in equations or methods that seems to put limits on the very messy concept of risk and uncertainty. Sellers find satisfaction in being able to provide specialized insights to senior management that took them years or even a decade to master, and has the patina of academic support. Both parties are quite happy not to have to deal with the uncomfortable realities of discontinuous discovery, which places human passions, insecurities and stubbornness at the heart of risk management.
With discontinuous discovery we deal with the particulars: the individuals and the science particulars of each investment
There is no safety in numbers. Portfolio Risk Management does not exist. There is no linear approach to discontinuous R&D. Progress tracking or quality hurdles+
We judge each investment in its entirety: do we still think management can pull a rabbit out of the hat in this highly speculative scientific pursuit?
Can they do it within the given time and resource constraints? Risk management requires a very labor intensive, on-the-ground assessment of the particulars of each investment: its sciences, its people, its management, the level of intensity in the team, etc. There are no cheap heuristics+
We won’t know if someone has mastered the compulsories in Risk & Uncertainty until we watch them during key behavioral moments
How do they react when a superior demands a quantitative assessment for a discontinuous pursuit? How do they react when they seem to be losing stature to others who practice erroneous, but compelling, risk management techniques? Given the difficulty many senior managers and governance officials will have with these compulsories, we need to set the stage to protect and advance the few individuals who master them. We do this through work practices and decision structures (e.g., we could summarily outlaw quantitative risk assessments – making them inadmissible evidence+
More Core Arguments for Mgt. of Risk & Uncertainty
