http://www.riskgroupllc.com/blog/2009/04/23/global-disconnect-need-to-understand-acknowledge-and-manage-interdependencies-at-all-levels/ A RISK GROUP GLOBAL INITIATIVE Thu, 21 Jul 2011 12:04:44 +0000 hourly 1 http://wordpress.org/?v= http://www.riskgroupllc.com/blog/2009/04/23/global-disconnect-need-to-understand-acknowledge-and-manage-interdependencies-at-all-levels/comment-page-1/#comment-44 mckibbinusa Thu, 23 Apr 2009 21:17:04 +0000 http://www.riskgroupllc.com/blog/?p=180#comment-44 If one views interdependency as correlation, then yes, correlation between independent variables increases the variance of the dependent variable, which translates as greater risk. So yes, interdendency would add risk. The question then becomes, do we we seek to manage those interdependencies, or to reduce or eliminate the interdependencies (?). I would suggest that the latter is the proper approach given the difficulty of determining the level of correlation (interdependency) between independent variables (even when we have continuous data). The axiom could also be, "avoid complexity." Good luck! If one views interdependency as correlation, then yes, correlation between independent variables increases the variance of the dependent variable, which translates as greater risk. So yes, interdendency would add risk. The question then becomes, do we we seek to manage those interdependencies, or to reduce or eliminate the interdependencies (?). I would suggest that the latter is the proper approach given the difficulty of determining the level of correlation (interdependency) between independent variables (even when we have continuous data). The axiom could also be, “avoid complexity.” Good luck!

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