By Sam L. Savage
John Button of Gartner, Eng-wee Yeo of Kaiser Permanente, and I have published a three-part blog series at the FAIR Institute: Part 1, Part 2, Part 3.
We were inspired by Eng-wee’s use of SIP Libraries at Kaiser, to integrate their risk and investment models. In 1952 the late father of Modern Portfolio Theory, and co-founder of ProbabilityManagement.org, Harry Markowitz, showed us that risks and returns have inevitable tradeoffs and cannot be considered in isolation.
The open SIPmath™ Standard provides a means to easily network together stochastic simulations of all sorts, including risk and investment simulations.
The FAIR™ (Factor Analysis of Information Risk) Ontology is a construct to account for and measure the effectiveness of controls against cyber risk. It plays a role analogous to Generally Accepted Accounting Principles (GAAP).
The open SIPmath™ Standard expresses uncertainties as data structures called SIPs that obey both the laws of arithmetic and the laws of probability. That is, you may perform arithmetic operations on two SIPs to generate a third SIP representing the result of the uncertain calculation. In effect they play the role of the Hindu/Arabic Numerals of Uncertainty.
So, FAIR meets SIPmath is like accounting meets numbers, a good idea all around.
I hope you enjoy the blogs and the downloadable SIPmath models that accompany them.
Copyright © 2024 Sam L. Savage