Stephen Dubner on Predicting Risk at RIMS 2011

by Emily Holbrook on May 4, 2011 · 0 comments

Stephen Dubner, author of Freakonomics and SuperFreakonomics, proved he is an interesting and extremely intelligent individual with the publication of his two books, which explore the hidden side of everything, from cheating teachers, bizarre baby names, self-dealing realtors, and crack-selling mama’s boys. Crazy, but smart.

The staff of Risk Management are fans of Dubner and co-author Steven Levitt’s work (read our review of SuperFreakonomics), so we were thrilled to learn that Dubner would be the keynote speaker here at RIMS 2011.

Dubner, a scholar and journalist, talked to the packed room about how difficult it is to manage risk, as he so aptly stated: “Assessing risk is predicting the future, which is somewhere between very hard and impossible.” He noted that even the “experts” cannot predict what will unfold in the future. As an example, he used football experts who predict the winners and losers every season.

“They have the best experience and access to info,” he said. “When you go back and look at their predictions, however, we’d have a better chance of predicting with a dart and dartboard.”

Why?

Because just like in business, you can’t predict acts of randomness. Though football experts may know what team or player they think is the best, they cannot predict injuries or turnovers, footballs acts of randomness. And it’s random events that can have a huge impact on your business. Though we can’t predict, we can prepare.

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Emily Holbrook is the executive managing editor for National Underwriter Life & Health and the former editor of the Risk Management Monitor and Risk Management magazine. You can read more of her writings at EmilyHolbrook.com.

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