I was working with the treasury of a bank. They were trying to estimate how much money could flow out of their savings account in a day, worst case. I took their total savings account balance at the end of each day and found the standard deviation. I took thrice the standard deviation, and said, “You can be 99.7% sure that your daily loss won’t be more than 1.5% of the balance.” ...
14 years ago, I was introduced to the process of normalising grades. Professors “fit” students’ marks into a normal distribution and assign grades based on that. (I still don’t know how they do it). Since then, I’ve encountered normalising a lot. My performance at work is normalised. I normalise my song ratings and movie ratings. I’ve normalised all kinds of things at work: lead-time of delivery of fans, movements in savings account balances, calls to a call centre, demand for a resource… you name it. ...
The Mathematical Structure of Terrorism. The frequency distribution of terrorist attacks – be it in Iraq, Columbia, Afghanistan or anywhere in the world – is the same. The frequency distribution of the size of terrorist groups is the same as well.