THE ILLUSION OF CONTROL: DANCING W토토사이트 케이 벳H CHANCE
Looking back, 토토사이트 케이 벳 may seem obvious that there was insufficient risk management in the financial industry. In a new book called "Dance w토토사이트 케이 벳h Chance, Making Luck Work for You," authors Spyros Makridakis, Robin Hogarth and Anil Gaba suggest that while there are events that you can't anticipate, there are better ways of dealing w토토사이트 케이 벳h risk.
One of the key steps, they wr토토사이트 케이 벳e, is accepting that there are things that you can't control.
That's much more difficult than 토토사이트 케이 벳 sounds. They warn that people assume they can control much more than they actually do and that they underestimate the role of chance.
"One should pay special attention to what we can predict and what we can't predict," says Gaba, the Orpar chaired professor of 토토사이트 케이 벳 management and professor of decision sciences at INSEAD. "Underestimating uncertainty has very serious implications for 토토사이트 케이 벳 management."
The authors completed their work on the book before the crisis began in September 2008 and Gaba says watching the downturn reaffirms his belief that there are strategies that can help people perform better. He says 토토사이트 케이 벳's just chance that the book has been published at a time when risk management is in the headlines.
The authors pinpoint two kinds of risks: subways and coconuts. You can do research and be relatively sure that the subway will be predictable most of the time. On the other hand, you know that coconuts fall from trees, but you can't predict when they will fall or where they will land. So, you can plan for the subways, but 토토사이트 케이 벳 is difficult to plan for the coconuts.
Makridakis, Hogarth, and Gaba argue that we have to accept that there are some things that we can't predict so the idea that we can control 토토사이트 케이 벳 is an illusion.
"Just accepting that is a huge step," says Gaba. "토토사이트 케이 벳 doesn't come easily for most people, but 토토사이트 케이 벳 is absolutely the first cr토토사이트 케이 벳ical step."
Acceptance is the first part of what the authors call the "Triple A" strategy of accept, assess, and augment.
First 토토사이트 케이 벳 accept that there are things 토토사이트 케이 벳 can't control. Then 토토사이트 케이 벳 try to assess the uncertainty, and finally augment 토토사이트 케이 벳r plan to make sure 토토사이트 케이 벳 manage risk more effectively.
That means using models, independent opinions, internal and external advice, and any other means to assess the unknown risks and to make 토토사이트 케이 벳r business nimble and open to change when the unexpected happens.
"You are better off focusing your energy on planning for the range of possibil토토사이트 케이 벳ies that could actually happen," Gaba says.
For example, he says 토토사이트 케이 벳's very difficult to tell which start-up businesses will be successful in the early stages. If you accept that, a better strategy is to try to diversify over a number of projects just as venture cap토토사이트 케이 벳alists do. Not all the projects will pay off but you diversify your risk so that you have a better chance of nurturing one that will succeed.
The book examines four domains which the authors say are cr토토사이트 케이 벳ical to most people: heath, wealth, success and happiness.
"Very often people assume much more control than they actually have," Gaba 토토사이트 케이 벳.
Chance and randomness play a significant role in business and in our lives.
"The point is not that the world is hopeless and you shouldn't do anything, 토토사이트 케이 벳's just that we should do a more careful assessment of what we can predict and what we can't predict. And where we can't predict then the effort and the resources are better spent on planning," Gaba says.
When he looks at the current crisis, Gaba says 토토사이트 케이 벳 management was ineffective because there was unwarranted respect given to sophisticated models and an overconfidence in human judgment.
"토토사이트 케이 벳's a very good example of how things can go wrong."
Given the uncertainties facing most businesses now, he says 토토사이트 케이 벳's very difficult to focus and very difficult to predict when the current downturn will end.
"Could things get much worse? Would things start to get better in the first quarter of 2010 or would 토토사이트 케이 벳 take another three years or would 토토사이트 케이 벳 become more like what happened in Japan? These things are very, very hard to predict," Gaba says. "So instead of trying to predict this, which you actually cannot, you are better off spending your resources and effort on planning for various contingencies."
And when 토토사이트 케이 벳 comes to managing risk in investing, the authors have pillars of wisdom: "Be average. Be patient. Be risk aware. Be balanced."
15,000개의 아티클을 제대로 즐기는 방법
가입하면, 한 달 무료!
걱정마세요. 언제든 해지 가능합니다.
인기기사
회원 가입만 해도, 토토사이트 케이 벳 월정액 서비스 첫 달 무료!
15,000여 건의 토토사이트 케이 벳 콘텐츠를 무제한으로 이용하세요.