When I discovered this article several years ago I filed it away for future reference. Last April (2013) I was asked to speak at the FDIC in Atlanta. I revisited this article and used it as an outline for my presentation, “Interest Rate Risk Modeling in the face of rising rates”. I love the whole article but here is probably my favorite excerpt:
Metrics presuppose that situations are orderly, predictable, and rational. When that tenet collides with realities that are chaotic, non-linear, and subject to the force of personalities, that faith – the belief in the sanctity of numbers –often trumps seemingly irrefutable facts…In an ideal world, we’d be able to offer a roadmap for the proper use of metrics –what should be measured and when, what are the best ways to measure, how should they be interpreted? But it isn’t simply space constraints that get in the way of this objective. Whether quantitative measures are beneficial or not depends less on the measurement themselves and more on how they are integrated into decision processes. Quick and dirty calculations can be helpful if users understand their limitations, and very precise models can be dangerous if given undue credence.
Susan Webber: Management’s Great Obsession | April 21, 2007
(The original title of the article was “Management’s Great Addiction,” – I found it in the May/June 2006 Issue of Across the Board magazine.)