Harmless error

I’m listening to a legal “true crime” podcast. Guilty-as-anything defendant keeps complaining about this error, this oversight, this unfair ruling.  But the thing is, none of those things really mattered. They didn’t materially contribute to the guilty verdict. The judge can say, when refusing an appeal, that those are “harmless errors” in that they did no harm.

Back to my world – often the best model is no model. If you must have a model, a simple model is better than a complex model. Simplifications aren’t just not a bad thing, they are good and necessary.

Complexity has massive downsides – run-time, increased risk of errors, more involved documentation requirements, longer development time, longer handover time, longer pick-back-up-months-later time, and harder to explain to clients.

Finding the appropriate simplifications is key to so much of what we do.  Approximations are not even just “harmless errors” they are a critical feature.

And yes, she totally killed her husband.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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