This case study was written to showcase the solutions a Canadian pharmacy chain developed to fight the high cost of drugs paid by Americans.
This year we created a series of promotional videos for a pharmacy in Surrey British Columbia. This pharmacy video used employees of the company rather than actors under our direction and high-level scripting so that the narrative would be consistent and flow with the intent of the owners.
Risk management takes real skills, developed over time, with tools to formulate options for any series of events that may occur during the life of a project. Those options range from negative risk, where an event will harm the project, to positive risks, where an event reveals a new opportunity to pursue.
But the real challenge is when a black swan appears. Black swans are big, bad, unanticipated catastrophes that force change. Sometimes referred to a VUCA and demanded a new way of thinking and responding to risk.
Black swans aren’t restricted to weather. In finance, they present mathematical challenges that earn Nobel Prizes for those who find new ways of modeling for the risks they represent, folks like Robert Engle.
The 2008 sub-prime mortgage crisis was a black swan. Recently, the graduate school at Simon Fraser University in Burnaby Canada took a deep-dive into how black swan events affected Value at Risk (VaR) strategy and published a case study on the top four methods used to set on a 10 million student services fund it has been building since 2003.
The study, while looking at the best of the best in risk management practices, pointed to three myths about which we should be aware.
One: Things Work When We Choose a Best Practices Strategy.
- The low-risk model, HS, over-estimated Swan for one year. That means the fund didn’t take advantage of stocks that were actually in positions to increase returns.
- 73% of banks use HS – that activity holds back investments that could stimulate growth only because the model is deficient, not because the opportunity was bad.
Two: What’s Good For a Fortune 50 Company is Good For Us.
- There is inconsistency even among the biggest players who are responsible for protecting the public from financial risk.
- In a study of VAR among the “Big 5” Canadian banks, researchers Xiaoya Chen and Duo Zheng studied data from 4340 trading days, including the beginning of the black swan. During that time a total of 43 exceptions (days where losses exceed the VaR) were acceptable to regulators, but 47 exceptions were created. When they drilled down into each bank, they found larger variances with two of the banks (BNS and TD) very close to the norm and two others BMO and RBC) significantly exceeding it.
- Even among the biggest players in the same industry risk is seen differently. To hold them up as a standard for project managers to use is foolhardy.
Three: Choosing a Well Engineered Best Practice Means We Can Short-cut Analysis
In the SIAS fund, the risk management strategy was weakened by the governance process focused on individual stock volatility rather than portfolio risk. They used seven teams to make strategic decisions which would go through a voting process resulting in a slow turnover and trading frequencies. The advisors, including three from top Canadian banks, tended to review the effectiveness of the team and how well past strategies held up. Rather than deep dive into the details of the chosen VaR, the methods used were accepted as industry standard.
It wasn’t until Hsieh and El-Hourani took on a more in-depth analysis of the portfolio for their thesis that it came to light that the ratios used for individual stock evaluation were flawed when looking at the collection. The short-cuts were taken, despite using best practices and industry standards were not good enough to optimize results and the black swan event pointed out the deficiency in the strategy.
This web content was part of a newsletter series on telecommuting I wrote to a company’s employees make a successful transition to working remotely.
On December 13, 2010 Shelley Fralic, of the Vancouver Sun, reported that Angus-Reid, one of Canada’s leading public opinion surveyors, determined that of the 500 Canadian small businesses they surveyed, 66% had off-site employees and that 61% reported increased productivity from those employees. Ms. Fralic also cited StatsCan who reported that in 2008 about 1.8 million or 11.2% of the entire Canadian workforce telecommutes – not bad for a large geographically challenged country with a small population of taxpaying workers.
While it is clear that Canadian small business is an agile and clever adopter of better ideas in the workforce, the reality is that today’s telecommuter should choose his or her mentor from the vast selection of American corporations whose processes have weathered the hardest of challenges and are now strong and robust. Huge multinationals such as J.P Morgan Chase, Boeing and Ford have leading manager awareness programs around telecommuting and many others share the spotlight; Apple, Walt Disney Company, NBC Universal, Comcast, GE, Time Warner, Pitney Bowes, UnitedHealth Group, American Express, Aetna, MetLife, Wellpoint, Microsoft, Nielsen, IBM, Kaisier Permanente, and Hilton are but a few of the top drivers in the American economy which support a robust telecommuting component in their workforce.
Underneath this strength lay the outsourcing paradigm. Originally seen as a corporate tax grab under Bush, outsourcing has matured and given advantages to all workers in the area of telecommuting. The silver lining in the cloud of American job loss is that there now exists seasoned processes to handle employees who do not work at the same location as their team or their managers. Today, employees can plug into that framework with much less resistance than they encountered ten years ago.
What your manager really wants
Managers today are trained to handle the complexities of directing the workloads of remote employees. They understand how to use the correct keys to accurately measure a tele-commuter’s tele-commitment. Of the few critical and key factors that I will discuss in this series, it is this first one that matters most. It sets the foundation for your measurement.
Despite the many variations on the theme, bosses start with your SMART goals. Now an industry standard, the ability to define goals that include Specific, Measurable, Attainable, Relevant and Time-Sensitive components will provide the framework you need as a telecommuter. The more time you spend up front refining these, the better your experience will be and the more likely you will continue towards your career goals.
If you are not familiar with SMART goals, you should know you are living on a whisper which will fade and take you with it. You will not last as a professional. If you think you don’t need SMART goals then you don’t even need to finish reading this article because you don’t have the drive you need to be a professional while telecommuting.
But for those who want to be a professional, start with your SMART goals. Make yourself an expert in this area, read, write, practice and discuss them. It sounds easy but it is not and everyone who masters this is a master because they did the work. As a telecommuter you need to join the other professionals in this group of leaders. There is plenty of information on this subject around, search for it, clean out the crap, hang onto the good stuff and devour it until you dream about it. Take ET’s advice and “BE GOOD” – at being SMART.
Despite all the good intentioned advice available, if you don’t get this right you have nothing other than fairy dust supporting your work life so suck it up and become an expert. Your boss will love the results this produces.
LET SMART INFORM YOU
SMART goals will make you think differently about your time, your contributions and your abilities. They will guide you into your strengths and weaknesses and set your path towards success, in-forming you by forming your inner core. If you aren’t good at setting, refining, monitoring and adjusting your SMART goals you will fail. You may keep your job but you will be as disgruntled as your Dilbert devouring friends who remain in the cubicle farm.
Ignoring this process, even if your Dilbert buddies gloss over it, is not an option for you as a telecommuting professional. Take it seriously and it will set up the frame of reference for all your work. It will make you stand out as exceptional despite the fact you may be laying on a lawn chaise while you work SMART on your iPad. Do this well and you will succeed and more importantly advance while working outside the office.
ON THIS ONE YOU MUST LEAD
I want to caution you against being a follower here. On this you must lead even if you are not a leader. Even if your manager tells you she or he does not place high value on these goals, do it anyway. Lead yourself – your manager will change and you must be bigger than you were when you first reported to him.
Over my career I changed managers more often than Murphy Brown changed secretaries and each time the door revolved I became a key player on the team because I was a professional, a professional who was no smarter than his SMART goals. Thankfully, my SMART goals were smart. Trust me. Start here and you will be as comfortable leading from Starbucks as you are when you are flown in to spend time in a meeting room.