Good Decisions: The Best Analysis of 2008  

By Eric Meyers

Suppose you have a challenge to solve. There is one proven way to make the best possible decision—analyze the situation carefully, using solid data. Doing so will give you the information you need to choose an effective course of action.

Taking this step is a critical component of good decision-making. In fact, analysis is so critical that we at Innovative Analytics & Training (IAT) follow analytical undertakings in many domains, throughout the year. Doing so enriches our knowledge of the best possible analytic tools and techniques and enables us to provide unique and objective solutions to our clients. This paper highlights the best analytic efforts we found in 2008.

In conducting this review, which is intended to be illustrative rather than comprehensive, IAT experts read open source literature and reporting of analysis in many industries and applications from the previous year.  We identified potential case studies that demonstrated qualities related to good and bad analysis.  We examined each case and reviewed its use of sources (data and information), analytic methods, the degree of analytic integrity demonstrated and the method for conveying the analysis.

In determining our best examples we had the luxury of hindsight, and we chose several articles due to the accuracy or inaccuracy of their conclusions.  Another distinguishing characteristic between the best and worst examples is the author’s ability to challenge the underlying assumptions of his or her position and to thoroughly address uncertainties and opposing viewpoints as part of the analysis. 

In this analysis of analysis, each section is arranged in chronological order, without any determination of the quality of an article relative to the others in that section. 

The Best Analysis of 2008

The Rising Risk of a Systemic Financial Meltdown: The Twelve Steps to Financial Disaster

Nouriel Roubini, RGE Monitor:  February 5, 2008

Roubini presents the factors that indicate the probability of a catastrophic financial outcome due mostly to a series of interconnected economic indicators that will increase the severity of the recession.  The analysis, a series of twelve steps, is based on assumptions that were largely dismissed or misunderstood at the time of publication by policymakers but supported by economic data.  In the past 10 months economists became increasingly aware of the threats and the challenges facing the government to correct the problem through new policies.  Although not all of the 12 steps outlined in the article have come to fruition to date, his analysis provided a clear roadmap for the ongoing economic crisis that has proven to be insightful, well researched and accurate.

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China’s Cyber-Militia

Shane Harris, National Journal Magazine:  May 31, 2008

The warnings about cyber security threats have grown louder in recent years, and the risks to critical infrastructure are increasingly recognized.  There is a growing consensus that China, which has demonstrated an increased willingness and capacity to successfully disrupt or otherwise harm a wide range of public and private targets, poses the greatest cyber threat to the United States.  One of the principle challenges facing the nation is that cyber security protocols and strategies remain largely uncoordinated despite the increasing number of security penetrations and high profile espionage.  Although Harris does not make his own policy recommendations, he provides a thorough investigation of the challenges facing our nation, with a critique of current policies and analysis of future strategies with insight provided by a range of prominent figures in the cyber field.

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In Search of Sustainable Security

Gayle E. Smith, Center for American Progress:  June 2008

As the impact of terrorism, instability and failed states on global security became clearer, policymakers and authors have focused more on this subject.  However, Smith does a very good job in illustrating how long term collective and national security relies on incorporating human security more fully as a component of our overall security strategy.  This requires an expansion of the traditional definition of national security threats to recognize the demographic, environmental and financial realities that shape the current international system.  She presents a strong and wide ranging analytic case that highlights the need for collective action and new action oriented policies to support sustainable security.  In addition, Smith addresses the limitations and successes of past initiatives while analyzing potential criticisms to her policy recommendations.

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A Survey of Al-Qaeda

The Economist:  July 17, 2008

In the six years since the Bush Administration invaded Afghanistan and began the Global War on Terror, the dynamics and scope of U.S. engagement have evolved in significant and unexpected ways.  This special report provides a strong analysis of emerging trends related to the Global War on Terror, the spread of Islamic extremism and governmental instability, which will continue to shape U.S. foreign policy and the future of global security in the coming years.  By breaking the related topics down, the authors are able to provide a more detailed analysis for each topic independently while successfully linking them together to generate a global systems view of the implications of these trends.  The articles successfully blend the analysis of the authors and external experts to present a vision of the current conditions and potential developments in the near future.

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Closing Guantanamo: From Bumper Sticker to Blueprint

Sarah Mendelson, Center for Strategic and International Studies:  September 2008

Guantanamo Bay has been a contentious issue for the current administration since allegations of prisoner misconduct surfaced, and the Obama administration will be faced with the challenge of satisfying national security responsibilities while working to restore our nation’s reputation and commitment to human rights.  With that in mind, Mendelson analyzes the potential courses of action available and outlines of the strengths and weaknesses of these alternative policy options.   While the title of the article suggests that closing the prison is the predetermined outcome, the article does not shy away from analyzing the challenges posed by the task.  She provides a step-by-step analysis of her recommendations and makes suggestions designed to mitigate concerns and satisfy national security objectives.

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Voices of America

Kristin M. Lord, The Brookings Institution:  November 2008

The Global War on Terror has lead to a changing global environment, both in terms of the security challenges that we face and the perception of the world to our policies and engagement.  The U.S. faces a world that is largely more critical of its foreign policy, including key allies, at a time when successful public diplomacy is more important to our collective security than ever before.  Lord analyzes the role that diplomacy will play in addressing the current challenges facing the U.S. and the potential negative consequences associated with previous and ongoing policies.  She also provides specific and detailed recommendations to strengthen our efforts, within the larger framework of the global environment, including the creation of a foundation funded, nonprofit organization to invest in our relationship with the global community.

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Coming in 2009

In order to develop the analytic capabilities and methodologies that support quality client solutions, Innovative Analytics & Training recognizes the value in studying analytic successes and failures.  In 2009, Innovative Analytics & Training will expand its annual review to incorporate examples of both best and worst analysis.  As a preview, we offer this excerpt from a report on the oversight failures related to credit markets.

The Lack of Analytic Integrity Among Rating Agency Analysts

As regulators and congressional oversight committees explored the credit markets in 2008 they uncovered the role analysts at the rating agencies played in inflating the market and exacerbating the magnitude of the problem.  This exchange between Representative Elijah Cummings and Deven Sharma, president, Standard & Poor’s.  Cummings states:

Let me show you an e-mail exchange between three analysts at S&P that took place on December l3, 2006. They are trying to figure out if the rating they are giving a CDO squared is justified.  In this first e-mail, an analyst named Chris Myers says he is worried about the CDO problems; and this is what he writes:

Doesn't it make sense that a triple-B synthetic would likely have a zero recovery in a triple-A scenario?  If we ran the recovery model with the triple-A recoveries, it stands to reason that the tranche would fail, since there would be lower recoveries and presumably a higher degree of defaults.

Now Myers then writes:  Rating agencies continue to create an even bigger monster, the CDO market. Let's hope--and this is--this is striking--let's hope we are all wealthy and retired by the time this house of cards falters.

The IAT Advantage

Innovative Analytics & Training (IAT) is at the intersection of government, nonprofit and commercial analysis and is committed to improving analytic capabilities and decision making for our clients.  At IAT, “The Sources and Methods Company,” our objective is to bring both deep expertise and new approaches to solving your most complex problems. 

Quality decision making requires the support of quality analytic techniques.  As our examples of the best analysis of 2008 illustrate, the frameworks, assumptions and methodologies through which analysis is conducted impact their accuracy and utility to the client.  Innovative Analytics & Training has the expertise to understand the complexities of our clients’ problems and the resources to offer unparalleled analytic solutions. 

We invite you to learn more about our company and its service offerings by visiting our Web site.

To nominate a piece of analysis for the “Best and Worst of 2009,” please send us a message.

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