Risk management and bounded rationality

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http://university.commetrics.com ==> These slides outline some of the material presented at the Lorange.org business institute

What works and what fails and why do we care about margin of error.
Unless your data are of quality - making good decisions is difficult

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Risk management and bounded rationality

  1. 1. My.ComMetrics.comComMetrics Session 8: Risk management bounded rationality how it works in business Presented by http://info.cytrap.eu/?p=134 social media trends 2011 http://info.cytrap.eu/?p=176 ComMetrics blog checklist Who is: Urs E. Gattiker? http://bio.gattiker.name Urs E. Gattiker , Ph.D. 2008_06_16
  2. 2. ComMetrics _About my 10 sessions: Slides – copies – latest version that I use in class can be found here: ==> http://www.slideshare.net/ComMetricsUniversity You can also watch videos at: ==> http://www.youtube.com/ComMetrics 2011_01_18 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  3. 3. ComMetrics _One more thing Please try to focus on the following: 3 most critical things we learned today 3 things I love to get more infos about We will discuss at the end 2011_01_17 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  4. 4. ComMetrics _Wrap up from last session 3 critical things learned – students listed/mentioned the following 2011_01_17 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  5. 5. ComMetrics _Wrap up from last session 3 critical things learned – students listed/mentioned the following 2011_01_17 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  6. 6. ComMetrics _3 most critical things we learned yesterday - Conflicting triangle - Communication of strategy - How to better search on Google - Tip - SM – reach different target group(s) for different purposes - Style does matter --- besides content, of course - Marketing/PR is push – Social Media (SM) is pull 2011_01_17 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  7. 7. ComMetrics _3 most critical things we learned yesterday -Strategy involves 1st clients, employees, suppliers and last shareholders - WordPress software allows you to manage a website, it is also a content management system (CMS) . Have different e-mail addresses for different purposes (newsletter subscriptions, business, news) helps when you change jobs & fight spam - SM can mean that a few people can make a lot of noise – sometimes even a small group can convince management to change brand logo, etc. 2011_01_17 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  8. 8. ComMetrics _3 most critical things we learned yesterday - Coming up with ideas and putting it into practice takes planning and time - Accept that mistakes happen - Social Media enables non-geeks to do many things, technology is the backend - KISS – Keep it simple, stupid http://howto.commetrics.com/?page_id=132 -SMART metrics http://howto.commetrics.com/?page_id=104 - Social Media is not only B2C but also involves B2B 2011_01_17 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  9. 9. ComMetrics _Example from a client How can we make these things work 2011_01_17 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  10. 10. ComMetrics _Example from a client How can we make these things work 2011_01_17 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  11. 11. ComMetrics _the client – check your data #1 Research says we need to use social media in 2011 Challenge better, more, etc. Strategy: do – it – But we assessed the risks, cost-benefit, Believe the above cited study? Margin of error? http://www.deloitte.com/view/en_US/us/press/Press- Releases/795bde62061cc210VgnVCM3000001c56f00aRCRD.html 2011_01_18 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  12. 12. ComMetrics _the client – check your data Solution hold up your hand if you hate research methodology? Sample, type of research, statistics, context of study? Big risk is when using one research report.... Do I make my decision based on useful information reported in the White Paper or do the findings not apply to my situation? 2011_01_18 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  13. 13. ComMetrics _3 Why it matters – today‘s 3 nuggets 1 What is risk? 2 How can one assess and manage risks? 2011_01_18 _Introduction >Purpose >HowTo >Tools & Tips >Decision >Conclusions
  14. 14. ComMetrics _Purpose What is this all about? 2011_01_18 >Introduction _Purpose >HowTo >Tools & Tips >Decision >Conclusions
  15. 15. ComMetrics _What is risk? Definition in textbook? Does you textbook define risk? How was risk defined in other MBA courses? Can you define systematic and unsystematic risk? What is your company‘s risk policy? (please bring document to class) :::::::::::::::::::::::::::::::::::::: 2011_01_18 >Introduction _Purpose >HowTo >Tools & Tips >Decision >Conclusions
  16. 16. ComMetrics _What is risk? CyTRAP Labs - risk - what amount of risk taking is aceptable to your organization 2011_01_18 >Introduction _Purpose >HowTo >Tools & Tips >Decision >Conclusions
  17. 17. ComMetrics _What is risk? Risk never sleeps http://www.youtube.com/watch?v=qDmBLF4-PzA&NR=1 2011_01_18 >Introduction _Purpose >HowTo >Tools & Tips >Decision >Conclusions
  18. 18. ComMetrics _What is risk? Inadvertent geo-tagging on your smartphone http://www.icanstalku.com/how.php Facebook unless you de-activate you can be geo-tagged http://commetrics.com/?p=10242 (near buttom – video) 2011_01_18 >Introduction _Purpose >HowTo >Tools & Tips >Decision >Conclusions
  19. 19. ComMetrics _What is risk? http://www.myfoxboston.com/dpp/news/special_reports/geotagging- putting-you-at-risk-20101109 video about geo-tagging Ask your friends before you mindlessly share being at the same restaurant or gondola. 2011_01_18 >Introduction _Purpose >HowTo >Tools & Tips >Decision >Conclusions
  20. 20. ComMetrics _From Purpose to HowTo How do we put this into practice? 2011_01_18 >Introduction >Purpose _HowTo >Tools & Tips >Decision >Conclusions
  21. 21. ComMetrics _Why is risk so difficult to grasp http://www.youtube.com/watch?v=laKprX-HP94&feature=related - How can we make it simpler – KISS is key 2011_01_18 >Introduction >Purpose _HowTo >Tools & Tips >Decision >Conclusions
  22. 22. ComMetrics _KISS – Each tries to identify the worst expected loss based on some confidence But they have a different approach in how they describe the distribution of losses 2011_01_18 >Introduction >Purpose _HowTo >Tools & Tips >Decision >Conclusions
  23. 23. ComMetrics _3 assigned readings – Topic 8 - we choose a student to moderate the discussion – you can volunteer yourself for today or for tomorrow - please have your notes ready – all students - Chosen reading is: - Could your risk management approach regarding IT, data, marketing strategy, R&D fail? 2011_01_18 >Introduction >Purpose _HowTo >Tools & Tips >Decision >Conclusions
  24. 24. ComMetrics _Tools & Tips – e-mails - What can we do to manage that risk.... ? - What type of risks are we talking about? 2011_01_18 >Introduction >Purpose >HowTo _Tools & Tips >Decision >Conclusions
  25. 25. ComMetrics _Tools & Tips - What about compliance and e-mail? - What do you do if I cannot reach your e-mail because the spam filter is to tough (does not let my e-mail pass)? - What kind of compliance issue is this? - Why use a private permanent address? a – work address b – private address Fred-Thomas, Roland, Thomas, etc. 2011_01_18 >Introduction >Purpose >HowTo _Tools & Tips >Decision >Conclusions
  26. 26. ComMetrics _Decision time – how do we deal with risks? - What can an organization do when it fails to run its governance properly? - What can the regulator do? Have financial markets changed because of the regulators? 2011_01_18 >Introduction >Purpose >HowTo _Tools & Tips >Decision >Conclusions
  27. 27. ComMetrics _Student Case – Fred-Thomas Altaner - Fred-Thomas leads discussion -2009-11-15 - Why You Cant Use Personal Technology at the Office -2010-03-08 - Are Macs Really Cheaper To Manage Than PCs? -We will relate the above readings to strategy, risk management and so forth 2011_01_18 >Introduction >Purpose >HowTo >Tools & Tips _Decision >Conclusions
  28. 28. ComMetrics _Innovation http://vimeo.com/6893285 How to predict earth quakes --- 9 min video Einstein/Swiss TV in German but with English sub-titles 2011_01_18 >Introduction >Purpose >HowTo >Tools & Tips _Decision >Conclusions
  29. 29. ComMetrics _Margin of Error 50 year maturity bonds as an example 2011_01_18 >Introduction >Purpose _HowTo >Tools & Tips >Decision >Conclusions
  30. 30. ComMetrics _Margin of error - How do we know we are right? How well the survey sample represents the population is gauged by two important statistics 1 - the surveys margin of error and 2 - the confidence level. Level of confidence is a measure of how confident we are in a given margin of error (often people use 95%). 2011_01_18 >Introduction >Purpose >HowTo >Tools & Tips _Decision >Conclusions
  31. 31. ComMetrics _How do we know we are right? The margin of error and level of confidence depend on the sample size (and NOT on population size). A confidence level of 95 percent, plus or minus 3 percent means that if this student or client survey is conducted 100 times, and if we get 50% to say it is very good, the percentage who consider career services ‘very good’ will range between 47 and 53 percent most of the time (i.e. 95 percent) Citation: Gattiker, U. E. (January 4, 2011). Raise your hand if you hate research. ComMetrics eBook series #2011-01, Zurich: CyTRAP Labs GmbH. 2011_01_18 >Introduction >Purpose >HowTo >Tools & Tips _Decision >Conclusions
  32. 32. ComMetrics _One last thing – Wrap-up What we learned 2011_01_18 >Introduction >Purpose >HowTo >Tools & Tips >Decision _Conclusions
  33. 33. ComMetrics _One last thing – Wrap-up 1 What is risk? 2 How can one assess and manage risks? 2011_01_18 >Introduction >Purpose >HowTo >Tools & Tips >Decision _Conclusions
  34. 34. ComMetrics _One more thing Please discuss: 3 most critical things we learned today 3 things I love to get more infos about 2011_01_17 >Introduction >Purpose >HowTo >Tools & Tips >Decision _Conclusions
  35. 35. My.ComMetrics.comComMetrics Session 8: Risk management and bounded rationality how it works in business Presented by http://My.ComMetrics.com (free registration) http://ComMetrics.com (blog) Roentgenstrasse 49 Street http://info.cytrap.eu/?p=134 social media trends 2011 CH-8005 Zuerich Zip Code Switzerland Country http://info.cytrap.eu/?p=176 ComMetrics blog checklist +41(0)44 272 1876 Voice +41(0)76 200 7778 Cell info@CyTRAP.eu Google Talk Urs E. Gattiker , Ph.D. www.ComMetrics.com URL 2008_06_16

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