Epistemic Risk and Requisite Variety
Epistemic risk relates to the risk of being wrong. Requisite variety relates to every possible way of being wrong. To manage epistemic risk, your epistemic "inspection process" or methods of checking, validating, and governing risk must have enough variety to match the possible errors which could occur. As was pointed out in this blog post , "completeness" is not produced by reasoning; what is considered "complete" must be declared or governed in some way. That is one thing that the Seattle Method provides, a definition or declaration of completeness. What authority do I have to define what is complete? Well, I am not really defining what is complete, I am defining eight indisputable things that are necessary for a financial statement to be considered correct. What I am prescribing is necessary to be considered correct, but it might not be considered sufficient . The ways one can be wrong when creating something like an XBRL-based report when a report m...