It’s the time of year when many people choose to take a holiday. And many in the risk world are looking forward to a welcome break from regulatory demands and the discussion about the business’ risk needs. However, there is one aspect of work life we do not leave behind – that is checking the numbers.
Here’s a great example of why simply accepting the numbers you’re given can be costly: During my holiday, I had dinner with some good friends. After an enjoyable evening, we were presented with the bill. For reasons long since forgotten, we’ve always played a little game to see who can get closest to estimating the bill.
The usual outcome is a spread of numbers hovering around the actual amount (normally the spread is caused by our estimate of the cost of the wine). On this occasion we were all grossly out – well below the number presented in the bill. Of course, this made us double check the items listed on the bill. Sure enough, there was a “little computer” glitch (as our waiter described it), and the correction was made to the final bill.
Spotting those “little” glitches is much easier if you have an idea of what an acceptable number is – based on a sampling, of course. Obviously, the samples financial institutions use in their chosen scenarios are more complex than a dinner tab. They contain large data sets and include more risk factors than the cost of a bottle of wine.
Without an analytics approach, how will you identify extreme cases that could hit your bottom line? Gut feel may protect you when you are in total control of the process, but when there are many people and systems included, the risk factors increase in complexity. Having a method to validate the number can save money, even if it’s just for a holiday dinner bill.
Take a look at the ways technology can help drive profitability, manage risk and achieve compliance with confidence.