Large multinational corporations spend tens of millions of pounds every year to fund their finance, accounting and auditing departments. The rationale behind this is that by conducting these activities it will put the company into a highly competitive position making it more efficient and informed. Employees in these companies undergo years of training both pre and post University to be able to conduct the complex and difficult activities this profession needs. Automotive manufacturers are no different, employing thousands of accountants and financial analysts.
If there is one thing that these individuals dislike the most it is uncertainty. They work best where cash-flows and interest rates are clearly known or can be determined with a high probability. Uncertainly adds both an element of frustration to these financial statisticians and also a level of risk to the company. Undoubtedly financial services have become better at taking account of uncertainty and working it into their analysis but this can only occur when the variable that is uncertain can be identified, investigated and quantified. In some situations it is not the known unknowns that we have to worry about, it’s the unknown unknowns.
