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Fraud, terrorism, bathtub
Lessons from reliability engineering to deal with crimes from frauds to terrorism
The concept of bathtub curve and its relevance for reducing operational risk losses has attracted me for long. It is rich with possibilities in their interpretation and application across contexts and domains. Though originating from the engineering discipline, it is applicable to finance where frauds need to be prevented. Failure rates in production are similar to frauds and other losses in finance. What causes them also have similarities.
The short point is that in any process losses could be high initially. It will come down due to learning effect. Thereafter, complacency, and wear and tear will set in leading to higher losses. The final effect resembles a bathtub curve which needs to be managed by postponing the last phase or reintroducing an entirely new machine or process.
I hope you will enjoy reading it, and see how it is applicable even in our day to day experience. Please read more here:
(881 words, five minutes read)
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