Guessing is not a strategy: How to build decision velocity with AI and real-time data
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I have to admit up front that I don’t care for the music of American pop music group REO Speedwagon. I either change the radio channel or turn it off altogether whenever their songs are aired. Their lead vocalist sounds like he’s singing through his nose, the guitarist’s solos are uninspired, but perhaps their most off-putting characteristic is that their lyrics lack internal consistency in the message. Exhibit A in the inconsistent-lyrics charge has to be the song Take It On The Run, from the album Hi Fidelity (1980). The song’s narrator keeps bouncing back and forth between providing evidence for his girlfriend’s infidelity, and claiming that he doesn’t believe that she’s being unfaithful. Check out the back-and-forth as shown in Table 1.
|
Take It On The Run lyrics[i] |
What’s He Trying To Say? |
|
Heard it from a friend who |
He’s presenting the evidence that she is unfaithful, and even admitting it makes him sad. |
|
But I know the neighborhood |
Okay, so now he’s reversed himself, discounts the evidence just presented, and doesn’t believe that she’s “messin’ around.” Makes me wonder why, exactly, is it “bringin’” him “down.” |
|
And even if it is, keep this in mind |
Wait … “even if it is?” So, she might be unfaithful? A second reversal, with consequences, if she is. |
|
I don't believe it |
Another reversal – he doesn’t believe that she’s cheating, “not for a minute.” |
|
You're under the gun |
I have no idea what this even means. |
|
You're thinking up your white lies |
We’re back to he’s convinced she’s unfaithful. |
|
You take it on the run, baby |
????? |
|
Then I don't want you around |
Still unfaithful. |
|
I don't believe it |
Back to faithful. |
|
You're under the gun |
????? |
|
Then I don't want you around |
Unfaithful. |
|
I don't believe it |
Faithful. |
I could go on (and often do), but you see my point. The remaining lyrics show another three reversals, bringing the grand total by my count to ten internal contradictions in a little over four-minute song.
Meanwhile, Back In The Risk And Resilience World…
I happened across an interesting post on the Express Analytics website when I did an internet search on the question “can risk management predict the future?” The article, entitled “Everything You Need To Know About Risk Prediction Models,”[ii] made several interesting assertions, but I kept being reminded of Take It On The Run for some reason, when it struck me: the author keeps contradicting him/herself when it comes to risk management’s (no initial caps) ability to actually predict the future. Before I get specific, a little clarification on terms. If I predict something is going to happen, it means exactly that: I’m stating that something that has not occurred will occur. If I state a probability of something happening in the future, I’m not predicting anything. As an example, if I state that a (fair) coin flip will result in heads, I’m making a prediction. If I state that the odds of a fair coin flip being heads is 50%, I’m not predicting anything, I’m revealing the results of a calculation. With that in mind, let’s take a look at some quotes from the above-referenced article.
|
From The Article[iii] |
Are We Predicting, Or Calculating? |
|
“Risk prediction models are a tool that can be used by businesses…” |
It’s right there in the text, “risk prediction models.” |
|
“…to assess the risk of certain events occurring.” |
Can’t get past the first sentence before the first reversal. |
|
“Risk prediction models are statistical models…” |
I could argue that the very phrase “risk prediction” is an inherent contradiction. |
|
“Risk prediction models are mathematical models that are used to predict the probability of an event occurring.” |
So, we are predicting an event? |
|
“Machine learning models use algorithms to learn from data and make predictions.” |
Okay, so definitely making predictions. |
|
“They (risk prediction models) are then used to make predictions about future events.” |
Making predictions. |
|
“The law of large numbers states that, with enough data, the probability of extreme events will be reduced.” |
Actually, no, it doesn’t, but the point here is that we’re seeing a reversal, and looking for the probability of events. |
|
“Risk analytics helps to manage risk-related issues by using technologies and techniques to deduce insights, calculate likely scenarios,…” |
Still calculating odds. |
|
“…and to predict future events.” |
Back to predicting future events. |
I don’t mean to pick on this particular article. It is, in fact, highly consistent with most of the other literature on the subject. By using the terms “predict” and “calculate risks” interchangeably, the risk management (no initial caps) aficionados can switch back and forth between kind-of asserting that risk management techniques can predict the future, and then stating that they are merely calculating the odds of a future event occurring. It’s this very back-and-forth type of thematic variance that points to the vacuousness of the risk manager’s (no initial caps) theoretical foundations.
Put another way, if your specialty is displaying all the thematic consistency of an REO Speedwagon song, it’s probably time to reevaluate your underlying codex.
[i] Retrieved from https://www.musixmatch.com/lyrics/REO-Speedwagon/Take-It-on-the-Run on October 10, 2023, 20:07 MDT.
[ii] Retrieved from https://www.expressanalytics.com/blog/everything-you-need-to-know-about-risk-prediction-models/ on October 9, 2023, 18:57 MDT.
[iii] Ibid, for each quote.
Posted on: October 11, 2023 12:21 AM |
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