You don’t have to like math to use numbers. Whether it’s dollars, time, miles per hour, units per hour – we all use numbers every day to better understand a topic and make decisions. They give perspective in ways words cannot.
But when it gets beyond simple arithmetic and into quantification of complex business objectives, enthusiasm for numbers fades for most people.
I recently had the pleasure of reconnecting with Karthick Dalawai, a 20-year veteran ERM practitioner.
We took some time to discuss an interesting “value-based” framework he used in various roles through the years to quantify non-financial risks and thus provide better insights to decision-makers.
As you can see from the links at the bottom of this article, we’re no stranger to the whole quantitative vs. qualitative conversation.
However, Karthick is somewhat different than our previous discussions on the matter. He is not a traditional “quant guy” but rather an ERM professional who translates goals into quantifiable metrics to determine the likelihood of achieving an objective or goal. All with the purpose of increasing leadership’s confidence in their ability to achieve an objective.
Please watch our full discussion or, if you are short on time, jump to a specific section.
- Introduction of Karthick and simplifying quantification for decision-making (0:00)
- “Not many are conversant in quant, but they are numeric by nature.” (1:30)
- How this approach works for small ERM teams (4:15)
- How do metrics for gauging success relate to your framework? (8:35)
- What is the first step practitioners should take for using this framework? (12:30)
- Begin with the end in mind – likelihood of success is flipping the ERM coin on its head. (16:25)
- “It’s not just confidence, but why are we confident?” (19:10)
- How this framework enables a business to ‘self-manage’ (21:35)
- Concluding thoughts – understanding the same numbers the business is looking at but through a different lens. (23:25)
First, thank you to Karthick for taking the time to speak with me on this interesting and vast subject. As you can hear in our parting comments, there is certainly a part 2 conversation we will have in the near future.
In the meantime, check out some of our previous articles and interviews about quantitative vs. qualitative assessment of risk and objectives, plus an outside resource that dives deep into “value-based” ERM.
- Yet Another Take and Surprising Twist on the Quantitative vs. Qualitative Debate
- Why Quantitative Risk Assessment is Not Just the Best But the Only Option – A Conversation
- Another Baby Step in the Qualitative to Quantitative Risk Assessment Journey
- Qualitative vs. Quantitative Risk Assessment – Can There Be a Middle Road?
- Why Do Most Organizations Avoid Quantitative Risk Assessment?
- Quantitative Risk Analysis – What Companies Must Have First
- Corporate Value of Enterprise Risk Management: The Next Step in Business Management by Sim Segal
How have you been able to harness quantitative approaches to analyzing and communicating risks and opportunities to company leaders?
Please join the conversation on LinkedIn to share your thoughts!
