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Forecasting and Risks
A White Paper by Professor Dr. Aaron J. Gellman, Northwestern University
www.infotech.northwestern.edu
Abstract
A key question to keep in mind when addressing any issue related to forecasting is whether the activity is primarily art or science. If the latter, it means that forecasts are largely produced relying on backcasts or upon mathematical models - not exactly a turn-the-crank operation, but almost. At the other extreme, holding that forecasting is fundamentally art, then it must primarily be based upon intuition and expectations, probably conditioned by past experience.
The issue is not simply which sort of forecasts carries the greatest risk. This is the case in large measure because most forecasts are a blend of science and art. Models of various sorts grounded largely in the past are modified (or their output is “adjusted”) through the application of the artistic, which looks to the future.
All of this is true for projections that, directly or indirectly, relate to information technology (IT) and its governance just as it is true for forecasts influencing other realms of a business or agency. The IT function is also no exception to the proposition that prudent governance does not allow risk managers to drive forecast results, influencing forecast outcomes even before they are fully developed in some cases. Risk managers may well (and ought to) point out the risks being courted if a given forecast is acted upon and make a case for adopting a view of the future which is less risky without unduly sacrificing market and profit performance. They must make their case convincingly in order to prevail.
Download Complete White Paper
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