Actuaries are those with a deep understanding of financial security systems, their reasons for being, their complexity, their mathematics, and the way they work (Trowbridge 1989, p. 7). They evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events.
Actuarial science applies mathematical and statistical methods to finance and insurance, particularly to risk assessment. Actuaries are professionals who are qualified in this field through examinations and experience.
Actuarial science includes a number of interrelating disciplines, including probability and statistics, finance, and economics. Historically, actuarial science used deterministic models in the construction of tables and premiums. The science has gone through revolutionary changes during the last 30 years due to the proliferation of high speed computers and the synergy of stochastic actuarial models with modern financial theory (Frees 1990).
The art of Operational Risk comes into play with practitioners and professionals who have the "Grey Matter" to see the big picture. They have the ability to think like the enemy, or examine the window of opportunity. Working with windows in time and the ability to see the convergence of particular events allows for the creation of scenarios, to draw more strategic insight. This ability to create filters and extract true meaning from raw data, segmented information and then from cognitive analysis creates the true vision we seek. This is an art as much as it is a science.
Forecasters in the hurricane, typhoon and tsunami warning centers around the globe know the meaning of using the science as much as the art of risk management. The nexus of security and terrorism puts another dimension on the meaning of operational risk management and now you have the Terrorism Screening Center (TSC) assisting with the fusion of intelligence to counter potential individuals from terrorist acts.
Suicide bombers have not hit the United States since the 2001 terrorist hijacking attacks, but they remain a constant concern because of their prevalence around the globe and determination to die for their causes, according to the FBI's chief of counterterrorism.
He does not believe America is overflowing with homegrown terrorists, but Joseph Billy said "a significant number" of attacks have been thwarted since airliners were crashed into the World Trade Center, the Pentagon and a Pennsylvania farm field on Sept. 11, 2001.
While declining to divulge the nature of the averted plots, Billy credited intelligence that led to either fortified security around potential targets or identification of suspected terrorists. Authorities recently stopped homegrown plots targeting the Fort Dix military base in New Jersey and a jet fuel pipeline at New York's Kennedy International Airport.
If you were planning an event for your organization in downtown Washington, DC for the 3rd week in October 2007, what are the factors that are taken into consideration? Have you scheduled to fly in all of your key executives for a Board of Directors Meeting and a round of golf at RTJ? What about all of the other events and organizers who have made the decision to hold their event the same week or day in October? What impact will any of these other events have on you and your organizations ability to facilitate a safe, secure and productive meeting for your participants, members or customers?
The fact is that many event planners and organizers are not even tied into the same database or the systems as the Chief Security Officer. The CSO in many cases is not aware that the sales or marketing organization has scheduled a customer summit or new product kick-off the same time as a scheduled anti-[insert activist group here] march. Or maybe it's just a PGA golf tournament or "Live Earth" concert drawing tens of thousands to the area to see their favorite player or band.
Live Earth is a 24-hour, 7-continent concert series taking place on 7/7/07 that will bring together more than 100 music artists and 2 billion people to trigger a global movement to solve the climate crisis.
Live Earth will reach this worldwide audience through an unprecedented global media architecture covering all media platforms - TV, radio, Internet and wireless channels.
Live Earth marks the beginning of a multi-year campaign led by the Alliance for Climate Protection, The Climate Group and other international organizations to drive individuals, corporations and governments to take action to solve global warming. Former U.S. Vice President Al Gore is the Chair of the Alliance and Partner of Live Earth.
So what? So what does the science of operational risk have to do with the art of operational risk?
Think clearly and use both when it comes time to develop your own "Fusion Center" for risk in your organization. Make sure you include the people and the data that could create the perfect storm when a combination of events all take place within the same time window. There are only so many hotels, convention centers and airports for people to utilize for the logistics of these meetings. The competition is fierce to get the location, dates and venues you seek to impress your audience. It's not always about the number of things going on at the same time, it is the combination of each unique entity that makes the "Art" of Operational Risk imperative.
Any combination of ingredients by itself can be harmless. But when you mix them together in the right amounts, in the right place, you could be facing a loss event that could not have been predicted looking at the science alone.