When I joined HDR I had the privilege to begin working with the thought leadership in predictive analytics. Doug, our founder, had already published his ground-breaking book, How to Measure Anything, that showed the business community that so-called intangibles (such as brand and customer experience) could be measured quantitatively. The book went further to completely change the way we think about measuring risk.
Applied Information Economics (AIE), the basis of the book, allows us to measure risk and return like an actuary and present it in such a way that anyone from the chief executive to the marketing department could understand it. I had always been interested in many of the tools and methods that make up the AIE method. Topics in behavioral science first pioneered by Kahneman and Tversky now had direct application to the difficult decisions faced by our clients.
Much of the work and research that I had admired so much at the University of Chicago was brought together by the practical application of the AIE Method. In particular, the work of Nobel Laureate Harry Markowitz and his contribution to modern portfolio theory.
Doug, Harry, and Sam Savage (Stanford Professor and author of The Flaw of Averages) bring their collective expertise together as members of the board of directors for Probability Management – a non-profit dedicated to rethinking uncertainty through education, best practices, and their open SIPmath™ standard.
Probability Management is holding their annual conference, Modeling Uncertainty In Cybersecurity, Operational Risk, and Regulation, this week in San Jose. All three will be presenting and Doug will be delivering the keynote address. Continue to check this blog for outputs and reactions from the conference.
“ProbabilityManagement.org is “a non-profit organization that aims at improving communication of uncertainty,” and applies “simulation-based communication to improve actual managerial decisions and public policies.”
– MIT’s SLOAN Management Review
“Probability management provides a level of clarity previously unavailable to senior Navy decision makers. Interactive stochastic modeling can alter the conversation from ‘What’s the right answer?’ to ‘What’s the right question?’”
– David Cashbaugh,
Director of Navy Personnel Research, Studies, and Technology