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Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985.  Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand (which is now part of PricewaterhouseCoopers).  She attended the University of Michigan and Wayne State University.

  • Managing Up vs. Managing Down: two different skill sets

    Kim Bowers of CST Brands: image from the New York Times article linked below Kim Bowers is the CEO of CST Brands , a large "corner store" retailer (they are a spin-off from the gas station company Valero ). She was recently featured in the NYT "Corner Office " article area, focusing on her views about management and human resources. Ms. Bowers indicated that over time, she has become "less tolerant of bad attitudes," and is quicker to sense when investing in an employee would be a waste of time and resources. She also has strong views about "managing up" (knowing how to communicate effectively with your boss) versus "managing down" (leading or inspiring the employees who report to you). Kim Bowers says: " I put people into two different categories: people who manage up really well and people who manage down really well, and I love the latter. If I find someone whose team would walk across hot coals for them, that’s the person I want to work with because I know there is authenticity there, and they are supporting their teams and vice versa. It’s the folks who manage up really well but have this underlying storm all the time who concern me because you don’t know if they’re just trying to charm to cover up. " Both skills need to be developed for an employee to be able to adapt to different types of leadership. Here are some guidelines from a different source: graphic from Ms. Bowers also has some advice for college students: " Make sure not to set your expectations too low for what you can do, and recognize that at every twist and turn you’re going to have opportunities to expand your horizons, and you should take those. You shouldn’t be looking just to climb the ladder, but be open to opportunities that let you climb that ladder ." Sources: " Kim Bowers of CST Brands on Managing Up vs. Managing Down ," by Kim Bowers, the New York Times, April 5, 2014. F ollow up: What was Kim Bowers' "CIA story"? Has fate ever intervened for you in a big decision? Do you think Ms. Bowers' early management experience shaped the views she holds today? Do you think her family position (birth order) influenced how she manages? Give examples. Do you do better at Managing Up or Managing Down? Why? What is hardest for you in the area where you are weaker?
  • What to ask before starting your own business

    image from momstownblog Toward the end of the year, many people resolve to do in the upcoming year what they have put off before. For the entrepreneurial person, that might mean deciding to start a new business. Forbes Magazine's Entrepreneurs Group recently published an article listing seven questions any would-be entrepreneur should ask themselves before starting up: Why am I doing this? It is important to know what is motivating matter what the motivation is. The need to be your own boss? To do what you are doing better than its being done at your current job? Because you have a new idea? Is this a good time? Timing is very important with respect to outside economic forces. Is a competitor going out of business, creating an opportunity, for example? What about the time constraints of your personal life? The best business idea launched at the wrong time will have difficulty succeeding. How much money will I need? Under-capitalization (not enough money) is a big factor in business failures. You need to make projections of cash inflows and outflows under a range of scenarios--especially "worst-case." Where will I get the money? Most entrepreneurs need to tap various sources to fund their new business. Make sure you have firm commitments and solid money sources. What other people do I need? Even if you intend to be a one-person operation, you will still need contacts and consultants--for legal help, marketing and website help, and accounting and financial advice. Cover all the bases in your business plan. How do I handle setbacks? Know your own personality--can you handle setbacks? Entrepreneurs need to have tenacity and resilience. If these aren't part of your personality profile, how will you weather any problems? What's my endgame? Know your exit strategy...What would make you leave the business? Do you intend to run it for your lifetime? Are you starting it up with the intention of being bought out? Many of the decisions you make on a day-to-day basis will be influenced by whether you are intending to be part of the business for the short term or the long term. Read the linked article for more details on these topics. Source: " 7 Questions To Ask Before Starting Your Own Business ," by Entrepreneurs group, Forbes, December 9, 2013. Follow up: Have you every tried something (whether it was a business or another activity) that was attempted at the wrong time? (Even a visit to an amusement park is influenced by weather and who is available to go with you.)...Did you attempt your activity again, when the timing was "right"? Describe your experiences. How can you apply these questions to your own career goals? Do you have a business plan for yourself?
  • Business tool: Naps

    image from Brian Halligan is the CEO of HubSpot , an "inbound marketing software platform." His experience is that all of his brilliant ideas arise either when he is falling asleep or just waking up. Even though these epiphanies arise only once or twice a month, it is important to him to nap on a regular basis, and he encourages his workers to do the same. Much of his workforce is part of "Generation Y." He has rethought the business culture and his management style in terms of what motivates and nourishes those in this generation. Some of the preferences Halligan tries to cater to include: workers wanting to work wherever they can work workers wanting freedom, but who are also willing to take on huge responsibilities workers wanting to change jobs about every six months (so he changes routines and assignments frequently) workers being motivated more by learning than by money. Halligan's philosophy about Human Resource management seems radical, but he seems to have been willing to adapt with the times--an important attribute in an information-technology-based company. Source: " Brian Halligan, Chief of HubSpot, on the Value of Naps ," by Adam Bryant, The New York Times, December 5, 2013. Follow up: What is an "inbound marketing software platform"? What is a "seam head"? What is "VORP"? Do naps work for you in the same way they work for Halligan? How do your own sleeping patterns either help or hinder your working life? Do Halligan's views about the "Gen-Y" worker ring true to you? Why or why not?
  • Dollar Shave Club's viral subscription marketing

    [View: y/ :550:0] video linked on YouTube Michael Dubin, the CEO of Dollar Shave Club , had two innovative ideas: Set up a subscription service to deliver high-quality but cost-effective razors to men via monthly shipments; and Star in and narrate an "irreverent" video advertisement to explain and promote his new service. His video was released in March of 2012, and he had 12,000 orders within 24 hours. As a privately held company, his financial numbers are not public information, but he must be doing pretty well, as he had a $9.8 million investment from Venrock in October, 2012. Dubin started the business with $35,000 of his own money, and ran it out of his apartment at first. He has achieved an arc of success that few entrepreneurs achieve. Source: " Riding the Momentum Created by a Cheeky Video ," by Darren Dahl, New York Times, April 10, 2013. " Dollar Shave Club: Brand Storytelling for Market Disruption ," by Omar Kattan, , October 1, 2013. Follow up: What is "market disruption"? (check out the Venrock link as well as the linked articles.) How does Dollar Shave Club fit that model? In what way is the Dollar Shave Club marketing model an innovation? What works well and what could be improved? Who is the "target market" for this product? Who might this marketing campaign not reach, or not appeal to?
  • Citibank Whistle-Blower Ignored and Fired

    image of Richard M Bowen III, originally from CBS interview, reproduced in the NYT article linked below. Richard M. Bowen III tried to tell his story on November 7, 2007 , when he was a Citibank executive in charge of mortgage underwriting. Bowen sent these words to top Citibank exectives: "The reason for this urgent e-mail concerns breakdowns of internal controls and resulting significant but possibly unrecognized financial losses existing within our organization." He detailed that the job he was doing--buying billions of dollars worth of "bad" mortgage loans, and packaging them into investments that would be resold--was creating serious problems for Citibank because they were over-valuing the investments. In other words, he described the crux of what would become the financial crisis that exploded in 2008. He was called the following week by Citibank attorneys and was told to keep quiet and wait to hear from them. They never contacted him. Bowen's responsibilities were reduced and he was marginalized within the company. In April 2008, he filed a whistle-blowing complaint, under Sarbanes-Oxley, with the Securities and Exchange Commission. He testified before the SEC, and filed over 1,000 pages of supporting documents, but there was no follow-up investigation. Meanwhile, Citibank received $45 million in taxpayer bailout funds as part of the "Too Big To Fail" deal engineered by Henry Paulson. (The U.S. government later parlayed the government's ownership position as a part of this deal into a $12 million profit.) Bowen was fired from Citibank in January, 2009, and had to sign a confidentiality agreement in order to get a severance package. In February 2010, Bowen was called to testify before the Financial Crisis Inquiry Commission . Although his later testimony on April 7 of that year is a part of the public record, the 4-hour testimony in February, with lawyers present, was sealed and cannot be accessed until 2016. Perhaps coincidentally, this would be after the five-year statute of limitations period for fraud has passed. Several events transpired between the initial FCIC meeting in February and the later public testimony, but the bottom line was that Bowen was pressured by Bradley J. Bondi (FCIC's deputy general counsel) as well as Citibank's lawyers, to sanitize his statement. Bowen decided that "it’s better to get something on record than nothing.” He made the requested edits. To him, the FCIC was clearly not functioning as an independent government investigatory commission, but was being strong-armed by Wall Street firms who had the power to affect the future careers of all parties concerned. As it happens, Bondi is now a partner in a Washington D.C. law firm and Citibank is one of its clients. Richard Bowen has this to say about the whole debacle: " It was devastating. It truly was. From my standpoint, the corruption extends to the highest levels of government. I feel absolutely, completely violated. " Source: " Was This Whistle-Blower Muzzled? " by William D. Cohan, New York Times, September 21, 2013. Follow up: Read, in the linked article, the detail of the events that transpired among Richard Bowen, the FCIC and Citibank's law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP. What do you think happened here? What alternative courses of action might have been taken, and what are the pros and cons of each--for Mr. Bowen, for Citibank, and for the American taxpayer?
  • Chinese "Steve Jobs" says his company is different from Apple

    image from Lei Jun, CEO of the Chinese company Xiaomi , is developing a reputation as the "Steve Jobs" of China. Yes, he runs a company that markets smartphones. Yes, he is a strong and visionary leader. Yes, he wears jeans and dark shirts. Yes, his product announcements are delivered much like Apple's product announcements. But in a recent interview on CNN, Lei Jun tried to downplay and contradict the comparisons with Steve Jobs. Lei Jun sees Xiaomi as a very different company from Apple. And he sees his role as very different from the role of Steve Jobs. image of CEO of Xiaomi, Lei Jun, from see linked VIDEO INTERVIEW Lei Jun views Apple as a "group of geniuses" who develop products that they have conceived as being what is innovative and best for their customers. Xiaomi, on the other hand, surveys its customers and potential markets, and then only designs and markets what their customers tell them they want. Another major difference, according to Lei Jun, is that Apple is a manufacturer of a product that has to be "marked up" considerably in price to cover costs of development and profit. Xiaomi, on the other hand, only incidentally is manufacturing and selling smartphones. Primarily it is selling future services that are what the consumers want. That way, the price of the phone itself can reflect the true costs of the phone manufacture, with a fair but small mark-up. Xiaomi began selling phones in 2011, and has rapidly expanded its market share in China. Their phones are manufactured by Foxconn, which also manufactures iPhones. Recently, Xiaomi hired Hugo Barra as Vice President of Xiaomi Global. Barra had previously headed Google's Android division. Although Xiaomi is currently privately held, it looks poised to be a major player in the world-wide smartphone market. Source: " Xiaomi CEO tired of Steve Jobs Comparison ," by David McKenzie and Charles Riley, @ CNN Money Tech, September 13, 2013. Follow up: Do you think that Lei Jun is being transparent when he contradicts the comparisons with Steve Jobs, or do you think he cultivates the similarities? Why did Hugo Barra leave Google to work for Xiaomi? What might this mean for the future?
  • Part Time Nation: good jobs turn permanently bad

    image from What usually happens during a recession is that people lose their jobs, and the economy slows. As the recession ends and growth recovers, jobs have returned and people can once again find full-time employment. Something different has happened in the recent recession and partial recovery. There have been rehires...but not for full time jobs. And those who managed to stay employed had their hours cut. New employee hires as the economy improved kept everyone in a part-time, no-paid-vacation-or-sick-leave, no-benefit status. Barbara Garson writes about the specifics relevant to this recession: " 21% of the jobs lost ...were low wage, meaning they paid $13.83 an hour or less. But 58% of the jobs regained fall into that category." "...employers used the downturn to dump entire departments and reorganize themselves so that the same work, the same jobs, requiring the same skills, would henceforth, in good times and bad, be done by contingent workers." D uring the course of the recent recession " ...corporate profits went up by 25%-30% , while wages as a share of national income fell to their lowest point since that number began to be recorded after World War II." Part time employment has traditionally been a "stop-gap" measure. But can productivity and quality be maintained over the long term by a part-time labor force? That remains to be seen. Source: " Abracadabra You're a Part Timer ," by Barbara Garson, Le Monde Diplomatique, English edition, August 20, 2013. Follow up: What was your experience in the job market over the last three years? If you are looking for your first full-time job after college, what kinds of positions have you been offered? Are the pay and benefits what you expected?
  • How to motivate people

    image from Understanding the human brain and human psychology is a key to motivating others, which is the essence of good business management. Tim Berry, a consultant, recently condensed some of his best client advice and posted it on his blog. Here are his suggestions about rewarding and motivating employees: " Do it fast. Delay kills the reward buzz ." Anyone who has trained a dog with a clicker knows that the instant reward is the only one that really works. Waiting confuses people and makes them less sure of what they are being rewarded for. " Do it publicly. Recognition matters more than money. " Berry thinks that people that are good want to have recognition from their peers, so a good place to reward people is in a meeting, or a group email. " Good people want more responsibility." Berry suggests that a great employee really wants to do more work, and have more responsibility. A less-interested--and less valuable--employee might think, "No good deed goes unpunished," if given more work as a reward for success. . Source: " 3 Best Ways To Reward People On Your Team ," by Tim Berry, Up and Running Blog, August 7, 2013 via " Today in Small Business ," by Gene Marks, NYT , August 9, 2013. Follow up: What motivates you in a work situation? Is Tim Berry off-base, or would his suggestions work to motivate you? What other motivators might work?
  • Depression on the job: direct and indirect costs

    illustration by Jason Rietman, in the NYT The number of individuals on federal disability pensions for mood disorders (primarily depression) is on the rise. "Eliza" (a pseudonym) is featured in a NYT story about how individuals like Eliza can become one of the 1.4 million Americans receiving aid for depression. The aid includes housing subsidies, food stamps, social security payments (SSDI) and fuel and transportation aid. In the last 15 years the number of individuals receiving this aid has doubled. The direct and indirect costs have also risen. The direct costs are first to the employers for sick time taken, and the costs of employing workers to cover for the employee. Then, there are direct costs for doctor's visits and medication--sometimes even hospitalization. If the individual gets to the point where they can no longer work, the medical costs are borne by taxpayers. In addition, there are indirect costs, which can include: "Presenteeism": the loss of productivity when showing up for work, but being less functional due to depression Reduced earnings that on average, are $16,000 per year less for employed people with depression issues Lower rates of successful marriage, which leads to higher rates of poverty Increased use of social services, due to living in poverty conditions or closer to the poverty line It is estimated that the cumulative costs to society of various mood disorders is half a trillion dollars per year--more than the U.S. spends on annually on Medicare. Research has shown that increasing care (and costs) in the short term (while individuals are still employed) can save money in the long term. A study in 2007 followed an "enhanced care" group and an control group. The "enhanced care" included telephone outreach, care management, and optional psychotherapy. The results were greater job retention in the "enhanced care" group, and an average of $1800 per employee reduction in costs to the employer, which was more than the cost of the enhanced care. The study was repeated with similar results at 12 primary care facilities. In a related study, similar outcomes also pointed to the effectiveness of early intervention and expanded mental health care. Obamacare will not automatically provide early-intervention mental health care, and the additional research on all relevant parameters to justify the costs in a political environment is prohibitively expensive. Nevertheless, it might be a good investment in terms of decreasing costs to businesses and to taxpayers in the long run. Source: " The Half-Trillion Dollar Depression ," by Catherine Rampell, New York Times, July 2, 2013. Follow up: Have you ever been depressed, or dealt with someone in your family or work or friendship circles that was seriously depressed? What effects did the depression have on the ability to perform daily tasks? What helped the depression? What made it worse? Untreated mental illness is often implicated in crimes--including weapons crimes, alcohol and drug abuse, acts of terror, and other expensive situations that cause harm to innocent bystanders. Given this, what do you think underlies the resistance, on the part of individuals and businesses who do not support mental health care, to providing early care that seems to be more cost-effective?
  • Productivity issues that hurt employers

    image from According to the first quarter report from the Bureau of Labor Statistics, unit labor costs increased, as they have over the last four quarters. When unit labor costs increase, it means that productivity has fallen per dollar paid. This will come as no surprise to those of us who have found ourselves wasting time when we should be working. YouTube, anyone? Pinterest? Of course, workplace distractions have existed in other forms for as long as workers have sat at a desk. But social networking is not the only drain on productivity for businesses. Here are some of the other ways that employees "cost their companies billions": Turnover: it costs and average of $3,500 to hire and train an $8/hr worker. Workers under high stress can cost employers 40% more (lost productivity, worker's comp claims, health care costs, ramifications of "shortcuts"). Workplace bullying can result in turnover, litigation and related costs ( ). Personal behaviors (substance abuse, including over-eating) can lead to lateness, absenteeism, and increased on-the-job accidents. Mental and physical health issues related to grief or domestic violence have huge productivity costs. Thievery and fraud--usually committed by those who have not committed other crimes--result in almost half of the inventory shrinkage experienced by employers. These problems could certainly explain why employers resist hiring! Sources: " 14 Surprising Ways Employees Cost Their Companies Billions in the Workplace ," by Eric Goldschein and Kim Bhasin, The Business Insider, November 29, 2011. " First Quarter 2013, Preliminary " Bureau of Labor Statistics, May 2, 2013. Follow up: Has your employer absorbed any of the costs described for you? Or for your family or friends? How would you handle these issues if you were in charge? If you have had any job for several years--or you know someone else who has--how has productivity INCREASED over the last decade? Which of the "costs" delineated above arise from that increase in productivity?
  • Stop doing these 8 things for a better work day

    Increasing productivity and managing interfaces are obviously business goals in manufacturing operations and in service businesses with billable hours. But productivity and interpersonal interactions in an office setting are vitally important to an individual's career growth as well. Here are some suggestions from a recent column from Inc. magazine's website: Don't check your smartphone while you are having a conversation with someone. Pay attention. Be present. Let the other person know they are important. Don't multi-task during a meeting--treat the meeting with importance. Don't think about celebrities others who have no impact on your life...the people who actually ARE in your life are the ones who will help you grow and succeed. Don't let your phone interrupt you with notifications of every email, tweet and message. You be in charge, and check your phone periodically when it is convenient for you. Don't dwell on the past--learn from your mistakes and then take a breath and turn your thoughts to something else if your brain tries to start re-writing history, or makes you tense by dwelling on errors. " The past is just training ." Don't wait till you are certain of success...just act with the intention of doing your best. You don't want to miss opportunities. Don't talk about anyone behind their back. Don't say "Yes" when you mean "No." It's easier if you also remember this saying as well: " No" is a complete sentence. Don't try to convince yourself by giving excuses to someone else. It might be hard to say "No" but it is even harder to live through all the moments that result from saying "Yes" to something that doesn't work for you. Source: " 8 things you should NOT do every day, " Jeff Haden, , April 8, 2013. Follow up: Which of these suggestions might you consider? What additional "bad habits" are hampering you at work or school on a daily basis?
  • Confidence: skill or liability? Crowd-sourcing may have answers...

    [View: :550:0] "Real Beauty." Dove , a Unilever brand, has an advertising history of encouraging normal-looking women to see themselves as beautiful. This video highlights what David Brooks, in a NYT editorial, perceived as a confidence issue for women. He decided to use "crowd-sourcing" as a survey vehicle. He encouraged readers to email with the answers to these questions: A generation after the feminist revolution, are women still, on average, less confident than men? A re women still more likely to flow into different domains in your organization? Do we undervalue the talent for self-criticism the women display in that video? The common phrase that came to my mind when I first saw this was "Reality check!" Neither the men nor the women had an accurate perception of their personal attractiveness. In general, the men saw themselves more positively than a third party saw them; women saw themselves more negatively. Is the assertiveness that comes with a more positive self-image a business asset? In my experience, it is better to have perceptions that are "right-sized" for the situation. Nevertheless, I am curious about the experience of others. I look forward to reading the results of Mr. Brooks' crowd-sourcing experiment. Source: " The Confidence Questions ," by David Brooks, New York Times , April 23, 2013. Follow up: What do you think of Dove's video? How would you feel if you looked like one of the women portrayed as the "negative picture"? How might this affect Dove's intention? What marketing technique is Dove employing by shooting and publicizing this video? What do you think will be the results of David Brooks' crowd-sourcing sociology experiment? What are your answers?
  • Anti-fragility: thriving in chaos

    image by Neil Houghton; related article linked below Nassim Nicholas Taleb is a big thinker. His latest book is about the concept of "antifragility," which he defines first as being the opposite of fragile. But his thesis is that the condition of antifragility is beyond resilient and strong in the face of adversity--it is a response in which things actually improve when the environment is chaotic . Taleb's approach uses three responses to disordered situations: fragile, robust and antifragile. Neil Houghton has used a four-dimensional approach to understanding responses, as illustrated in the grid above. One way to extract meaning from the chart is to locate points on the red tetrad--"stable" and "robust" for example. One consequence of this combination of responses is being "rigid." On the left side of the chart, at points on the green tetrad, you can see "difference" and "coherence." The possible outcome of these states of being is "emergence." I think that "emergence" is one of the positive outcomes that Taleb was imagining in his theoretical approach (though many reviewers object to the tone and manner in which he makes his point). I like these approaches toward understanding chaotic situations, because they expand the palette of choices individuals perceive as responses, and they suggest possible outcomes. The axiomatic premise is reality-based: Disorder will arise...and we don't have to be afraid of it. " Ice-breakers " at parties or conferences increase people's stress initially, but often create camaraderie and connection soon thereafter. Dumping a messy drawer onto a table is a good way to start to improve it. Life-threatening disease can cause individuals get into better shape than ever. In some businesses, " zero-based budgeting " can lead to more profitability after a period of severe disruption. Nevertheless, there are many situations where a calm and orderly approach produces the best results. Sources: " You are all soft! Embrace Chaos! ," by Michiko Kakutani, New York Times , December 12, 2012. " Antifragility and the future ," by Neil Houghton,, December 30, 2012. Follow up: If you are a business student, do you think that you are being prepared well for a business life where successful individuals must thrive in chaos? What courses, skills and activities have you participated in that have enhanced your ability to stay calm and think under pressure? What situations, in your experience, might gain from disorder? What situations are likely to suffer from disorder?
  • Consumer relations: Top ten complaints

    image from Complaints. We all have experienced unfair treatment or poor products. Sometimes the situations are so egregious that consumers take their complaints to a higher level. The Federal Trade Commission (FTC) keeps track of the complaints it receives involving businesses. Last year, the FTC received over two million complaints, and they recently published the top ten categories into which those complaints fell: Identity Theft Debt collection Banks and Lenders Shop-at-Home and Catalog Sales Prizes, Sweepstakes and Lotteries Impostor Scams Internet Services Auto-Related Complaints Telephone and Mobile Services Credit Cards Some of these complaints involve real fraud, but some result from poor communication and unskillful customer relations. Dealing with complaints that escalate can be costly for businesses...and in the current environment of immediate social networking, business mistakes can be instantly (and unilaterally) publicized. Businesses can also adopt a pro-active approach to customer relations that is positive and effective. Real-life complaint outcomes are delineated in columns written by The Haggler , David Segal, published in the New York Times . These tell the stories of consumer complaints that have gone unresolved, and the various strategies that are employed--with the added pressure of a published outcome--to achieve a fair outcome for both sides. The world is not perfect. Mistakes happen. Miscommunications can lead to consumer disappointment. How businesses handle these imperfections may be more important than what actually happens. No legitimate business wants a complaint to escalate to the FTC. Source: " Top Ten Consumer Complaint Categories ," source: Federal Trade Commission, published in Insurance Journal , March 29, 2013. Follow up: What management techniques can be used to avoid mistakes before they happen? What kind of "complaint department" does your business have? If you are going to school, what are the avenues for complaints about grades, instructors, or worse? How well does the complaint management system work? Describe your experience with complaining to a business, or filing an official complaint with a government agency. Were you successful? What techniques worked well and what failed?
  • Human frailty foils risk management models

    image from Risk management calculations really ARE "rocket science." The discipline attempts to quantify risks in workplace and product safety, as well as manage assets over the long term to provide employee benefits and adequate capital for growth or periods of economic stagnation. The portion of the risk management department that involves workplace safety is usually well-attuned to the human factors that can make the best of plans go haywire. But on the finance side, the investment banking models that use algorithms to predict world markets, economic trends and changing demographics can be very esoteric, very math-oriented and very out-of-touch with human factors that can derail the models. John Breit , a Columbia-trained physicist, has been a risk manager in the investment banking mode for 25 years. He was part of the wave of mathematical modelling professionals that displaced, to some degree, the "old boys' network" that ran the big investment firms prior to the 1980's. According to some observers, the mathematical modelling and the "smart guys' hubris " is what has caused the financial debacles since 2000. Breit observed that something else was going on. He saw that the mathematical models--which the traders and executives did not understand--were used to hide the risk and prevent the traders and executives from questioning the models and providing information feedback from their "human intelligence" about what was happening in the markets. Breit thinks that the regulatory and compliance models that require managers to do check of boxes on forms prevents or at least discourages them from providing substantive feedback about growing mistrust or human "gut feelings." Breit feels that the emphasis on avoiding being blamed is preventing open discussions and brainstorming possible risks. So traders feel isolated, but still under pressure to produce big gains, so they are vulnerable to a too-positive projection. If the details of risk management are not your cup of tea, but you still want a generalist's overview of the investment side of risk management, rent or stream the movie, Margin Call . Sources: " Uncovering the Human Factor in Risk Management Models ," by Jesse Eisinger of Propublica , via NYT Dealbook , April 3, 2013. Follow up: Are you interested in the "risk management" side of business? Research the "human resource" aspect of this service department as well as the computational aspects of the job. What are the management challenges for this area? Research the differences in risk management with respect to workplace safety and risk management with respect to asset and profitability projections. What are the uncertainties in each area? What is " VaR " ? Does it provide useful information? Why or why not, according to John Breit? If you want to investigate this topic further, consider reading The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb. [Taleb's thesis is not the same as Breit's]