28 June, 2008

Mortgage - Doddgate = more homeless

Look if we remove the risk and impact on mortgage companies of defaulted loans the result will be more defaults and therefore foreclosures. The result of congress bailing out the mortgage companies will be more foreclosures not less because they will have less incentive to negotiate with borrowers who are on the line.

This holds especially true in variable rate loans where the borrower is able to make initial payments but the increased payments are out of reach. In these cases neither the borrower or the lender should have made the agreement in the first place but if you remove the downside of the default from the vendor why would they ever entertain the idea of negotiating with someone who was making payments earlier.

This article misses the point in the end but I agree with the bailout point. Government involvement is exacerbating the problem and it isn't a solution.

This makes Doddgate even worse. Dodd's FOA status might lead directly to more people getting kicked out of their houses.

We need to make it clear to Congress and the Senate that they need to be very careful about how they walk when it comes to solutions that take away one side of the bargaining position. In this case our side.

18 June, 2008

FMEA Step 1

Develop the Ratings table/index

The ratings table consists of 3 columns.

Severity Rating

Occurrence Rating

And Detectability Rating

You typically have a scale from 1 to 5, 7 or 10 depending on the level of granularity that is needed in your organization

Anyone who has done a real BIA would get the Severity section almost immediately.

In short the trick here is to tie each escalating level of severity to some specific series of business impacts.

Brand/Reputation - TJX, Hannaford ... what else needs be said
Direct Financial Loss - Fraud, Equipment Damage, Theft, Embezzlement, Lost Sales ...
Indirect Financial Loss - Cost of Data Recreation, Lost FTO time, Lost future sales, Project Delays
Legal Liability - often part of direct and indirect but also includes, Legal costs, Fines, Cost of increased regulatory oversight ...
Compliance - The costs associated with failed compliance

Many more ... when you develop the ranking table do it with the business leads and let them define their concerns

Occurrence, and Detection Continued later

I will stress this one more time this is not a risk assessment it is a risk priority ranking. The risk guru's will definitely get the distinction right away but if you don't get it and you are doing this you will eventually run into the all powerful cost justification argument. It is powerful when dealing with audit and those pesky internal budget decisions.

Because it focuses primarily on priority it is faster, easier and more agile. Think 10 meetings vice 100 with 20 people instead of 200. (obviously adjust those for company size)

17 June, 2008


Failure Mode Effects Analysis

I mentioned it a few weeks ago.

In a nutshell it is a relatively fast and dirty way of weighting and assessing relatively relative priority of risks. It is not a risk assessment and certainly not a ALE but if you combine it with a good series of BIA's linked empirically to the Failure Effects that are assessed against it can close a lot of gaps with not much work. If I were a consultant looking for a quick way to add risk prioritization value to a client I would certainly look into it. If the ratings table is properly developed it also significantly reduces the controversy of the rankings quite a bit.

More later

11 June, 2008

Musical Religious Jux

I might be a bit schizo

Though if you listen one is the promise the other the fear.

another one that has no video is here http://music.yahoo.com/track/16308352