1. Responsible
Model
Development

2. Sell
Data Management
&
Sensitivity Analysis

3. When the client asks how wrong the model
can be, we should be able to look into his eyes
and say,
The recommendation based on the modeling
results has an error of $0.5Million.

4. Tell the client the model can be wrong is
And
the right thing to do.
to do the thing right, we need to tell how wrong it is.
And that’s something we believe can
sell.

5. Right and wrong are just the
flip sides of
RISKs.

6. Asset Management Guys tell us:
Business Risk Exposure =
Probability of Failure
X
Consequences of Failure

7. How Wrong the Model is?
Business Risk Exposure =
Probability of Model being Wrong
X
Consequences of Model being Wrong

8. An Example

9. Pipe 1
Pipe 1
Pipe 2
If GIS is right
Pipe 2
If GIS is wrong
Pipe 3
Pipe 3

10. Consequences of being wrong:
spend $30,000 on a good pipe
Probability of being wrong: GIS with no source attribution, 70% chance of a typo.
The error of the recommendation is
$30,000 * 70% =
$21,000

11. More generic formula
BRE = $30,000 * (0.2+0) = $6,000

12. It is the modeler’s responsibility to inform the client the limitation of the
model, and the extent.
It is a good way to sell Data Management and Sensitivity Analysis services.
It is a good way to add
true value and gain trust.

13. Model responsibly.
Reference: Rules for responsible modeling, James, William, CHI
http://www.chiwater.com/Publications/Books/r184.asp