Tuesday, August 13, 2019

Against the Gods .... (no luck required)

If you are in the project management (read: risk management) business, one of the best books that describes the philosophy and foundation for modern risk management is Bernstein's "Against the Gods: the remarkable story of risk".

Between the covers of this "must read" we learn this bit:
The essence of risk management lies in maximizing the areas where we have some control over the outcome while minimizing the areas where we have absolutely no control over the outcome and the linkage between effect and cause is hidden from us.

Peter Bernstein
"Against the Gods: The Remarkable Story of Risk"

Knowledge and control
Picking apart Bernstein's "essence" separates matters into control and knowledge:
  • We know about it, and can fashion controls for it
  • We know about it, and we can't do much about it, even if we understand cause and effect
  • We know about it, but we don't understand the elements of cause and effect, and so we're pretty much at a loss.
Of course, Donald Rumsfeld, in 2002, may have put it more famously:
" ....... because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don't know we don't know."
No luck
So there is an ah-hah moment here: if all things have a cause and effect, even if they are hidden, there is no such thing as luck. (Newtonian physics to the rescue once again)

Thus, as a risk management regimen, we don't have to be concerned with managing luck! That's probably a good thing (Ooops, as luck may have it, if our project is about the subatomic level, then the randomness of quantum physics is in charge. Thus: luck?)

Indeed, our good friend Laplace, a French mathematician of some renown, said this:
Present events are connected with preceding ones by a tie based upon the evident principle that a thing cannot occur without a cause that produces it. . . .
All events, even those which on account of their insignificance do not seem to follow the great laws of nature, are a result of it just as necessarily as the revolutions of the sun.

Buy them at any online book retailer!

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