Our World Statistics Day conversations have been a great reminder of how much statistics can inform our lives. Do you have an example of how statistics has made a difference in your life? Share your story with the Community!
A full house gathered to hear Sam Savage’s latest seminar Risk Visualization: Shining a Light on Uncertainty at the Sheraton New York last Thursday. This diverse audience represented a large cross-section of area leaders and practitioners in the financial, insurance, public, healthcare and academic fields, to name a few.
Everyone was thrilled to get the rare chance to listen to this noted leader in probability management and hear more about Sam’s breakthrough ideas on how they could use new paradigms, simple methods, and the power of JMP to better visualize the risk in their own business situations and make more profitable decisions.
Sam riveted the crowd with his great stories and examples that clearly showed how past traditional approaches to understand risk can fall short, sometimes with dire consequences. These old risk models came from the “steam engine days” and are way too complicated and outdated in modeling modern business situations that have many contributing factors. One powerful example was the failure of recent business models to take into account how a negative downturn in the home mortgage markets could interact to create the sub-prime economic collapse, which has brought down markets across the globe! Sam’s proven methods of getting away from modeling historical pasts with point estimates and instead simulating future states could have better prepared the financial sector to have foreseen and created lending practices and regulations that would have been more robust in both good and bad times.
Sam left the crowd with a new way of viewing their world and how we could each personally make better decisions through understanding the true risks (probabilities). He pointed out how past ways of teaching about risk were overly complex and put up an “Algebraic Curtain” that separated us from visually seeing, understanding and acting on uncertainty. Furthermore, he showed how through the “Flaw of Averages” our snap decisions based on data are often wrong because we often act based on our “gut feel” and don’t take the time to visualize and see the real variation and interrelations that affect decisions.
Sam’s solution was to introduce a new paradigm that forms the new field of probability management. With this new approach, we can actually simulate risk through modeling the different scenarios of future uncertainty through shapes (distributions). Breakthroughs in approaches and the growing power of desktop computer analytics and visualization through JMP can now unlock the interrelated uncertainties and guide us to better diversify our plans, resulting in better performance with less risk of missing goals. Lastly, Sam envisioned a near future where whole organizational structures, roles and libraries are created around organizational probability management on an ongoing basis.
Jeff Perkinson from the JMP team also spoke at the seminar and wowed the crowd by demonstrating the ease and power of JMP 8. Jeff showed how JMP can easily capture large data sets, interactively analyze the data and produce powerful visualization for better decision-making. Jeff showed how JMP’s powerful tools -- such as the drag-and-drop Graph Builder, Scatterplot Matrix, Animated Bubble Plots, Interaction Model Profiler and Simulator -- help bring risk visualization to life in a graphical and user-friendly way.