Up here in New York–where everyone is eyeing the market anxiously and many are still muttering woulda-shoulda recriminations about risk assessment–a gust of fresh air just blew in. It came up from–of all places–Florida, where the real estate market has been reduced to rubble and there are thousands of empty hotel rooms. But even in this setting, Dave Eller, The Finance Guy, is optimistic about future of risk analysis and its essential role in what he calls the "stewardship" of resources. When it comes to decision evaluation, Eller is high on the goodness factor in decision makers.
The Finance Guy has been building simulations since before the advent of dedicated Monte Carlo software and has had extensive experience in large corporations, particularly in oil and banks. Two years ago, writing for the hospitality industry he predicted today’s financial turmoil. "I’m not a doomsayer–not at all," he told me, "but I could see it coming. Now the typhoon has struck, and we’re sitting on the beach." There’s no need to blame this on risk simulation, he says, just bad simulation based on self-serving assumptions.
On the beach or not, no need to despair. "The country is going through a cleansing process. It’s almost biblical," he says about the many businesses working through the results of many bad decisions. "The heart of this cleansing process is making good decisions–stewardship of business resources." By his definition, good decisions involve people of principle who use detailed, objective models that tell them how to factor cost and risk into operations management. "Stewardship is very simple," he declares, repeating the mantra his clients know well, "Cut costs, reduce risk, make money." Cut costs, reduce risk, make money. Cut costs, reduce risk, make money.