The MI (Management Information) Conundrum: Navigating Objectivity and Subjectivity

Management presentations are often prepared by individuals with deep insights but no authority, and presented to individuals who may not understand the variables but hold full authority. This is where Management Information (MI) comes into play. MI is a crucial tool that enhances risk communication and aids in trend analysis to solve problems, as explained by the Financial Conduct Authority (FCA). https://www.fca.org.uk/firms/fair-treatment-customers/management-information#:~:text=Management%20information%20(MI)%20is%20important,active%20rather%20than%20merely%20reactive.)

However, we often get it wrong. Why is that? It could be because we subconsciously aim to transform uncertainty into certainty. We may speak in parlance to explain, which most committee members or board members may not comprehend. Alternatively, we might feel obligated to provide an illusion of certainty.

The FCA's financial crime guide suggests that MI should include sufficient information for senior management about:

-       Any emerging risks.

-       Regulatory changes impacting the firm's way of doing business.

-       The overall effectiveness of controls.

Horizon scanning, as mentioned in points 1 and 2, becomes the foundation of the cognitive domain. MI should not just provide a snapshot (picture) but a comprehensive narrative (movie) of the past, present, and future. At the very least, MI should strive to illustrate both the knowns and unknowns, aligned with the Rumsfeld Matrix.

The Rumsfeld Matrix:

                        Unaware(Unknown)                 Aware(Known)

Known Unknown (Unaware)	Known(Aware) Known
Unknown Unknown (Unaware)	Unknown (Aware) Known

Known

Unknown

 Known knowns (I Know What I Know): These are facts or variables that we're aware of and understand. They form the basis of our knowledge and provide a solid foundation for decision-making.

Known unknowns (I Know What I don’t Know): These are factors that exist, but we don't fully understand. They represent gaps in our knowledge that we must address through research and investigation.

Unknown knowns (I don’t know What I Know): These are elements that we don't realize we know.

Unknown unknowns: (I don’t know what I don’t know) These are factors that we're not aware of and can't predict. They represent the most significant source of uncertainty and risk, as they can catch us off guard and derail our plans

Effectively using Management Information (MI) hinges on achieving a delicate balance between objective and subjective analysis. Objective analysis, whether it should be the rule of law, in strict accordance with legal requirements. However, discrepancies in interpreting what constitutes objective lead to dissent within teams. Different stakeholders may diverge in their views on relevance or interpretation, highlighting the inherent conflict arising from varying tests of objectivity.

Conversely, incorporating subjective analysis, which is the spirit of the law, allows for acknowledging the nuanced variables influencing information application. This approach enables organizations to understand and align with the underlying principles of the law. To my view is what is important For example, while objective data may demonstrate compliance with specific regulations, a subjective analysis may uncover opportunities for more profound, value-driven actions beyond mere compliance.

It is imperative to reconcile objective data with subjective insights to not only meet regulatory requirements but also embody the principles underlying them. By doing so, organizations can navigate conflicts arising from differing perspectives on objectivity within the organization effectively.

Consider a scenario where a customer presents an out-of-date passport or driving license for identification. From an objective standpoint, these documents may not meet the current validity requirements, leading to potential conflicts in their acceptance for identification purposes. Different stakeholders within an organization may have varying interpretations of what constitutes valid identification, thereby creating internal disagreements and hindering the effectiveness of controls. On the other hand, subjectively analysing this situation would involve considering the customer's individual circumstances, such as their limited need for travel or driving, which may justify alternative forms of identification. By incorporating both objective and subjective assessments, Management Information (MI) can help organizations navigate such complexities, ensuring compliance with regulations while also understanding the spirit of the law.

As a bare minimum Management Information should have dashboard depictive both quantitively and qualitatively data. It should have a commentary box by the analyst, not inferences but commentary guiding the Committee/Board members on what the diagram/ numbers reflect. It should be followed by Analytics box for the members to write down what they have understood and lastly it should include the Action if any , date of completion and RACI (Responsibility, Accountability, consultative and Information (Usually the committee/Board). RAG ratings should be avoided as it obscure the nuances and lead to false certainty.

Management Information should follow TRAC

• Timely: Should be able to generate quickly.

• Relevant: It should be relevant to a situation Management can control or influence.

• Accurate

• Consistent