Wayne Penello ’79 is not afraid to take risks. In fact, he’s built a career out of it.
As president and founder of Risked Revenue Energy Associates, Penello helps companies understand the importance of risk management. Now, he’s sharing his 40 years of experience in Risk is an Asset — a book he penned alongside his colleague Andrew Furman that has been published by ForbesBooks.
But Penello wasn’t always in risk management. With a master’s degree in Marine Sciences from Stony Brook University, he began his career as a research scientist. Somewhat unexpectedly, Penello told us, it’s his research training and his experience at Stony Brook — that led to his success in business. Penello even dedicated his book to his professors at Stony Brook, acknowledging their role in his career.
Tell us more about your journey from Stony Brook University to your role as president of Risked Revenue Energy Associates and now author?
As a businessperson specializing in commodity price risk management, I’ve had the privilege of working on a vast range of complex problems. The education I received at SBU helped me develop a foundation of skills that eventually led to my understanding of statistics and chaotic systems.
My late advisor, Bud Brinkhuis, was a researcher and professor who made every effort to broaden my analytical and communication skills. His influence and support gave me the confidence to approach and obtain the training I needed from several other excellent scientists, both on campus and elsewhere. As a graduate student, I conducted experiments and studied at Cornell’s Veterinary College, Woods Hole Oceanographic Institute, Brookhaven National Laboratory and Stony Brook’s medical school. I also was part of a research team of marine scientists that took samples across the Caribbean Sea. Bud was my advocate through everything. The breadth of experiences offered by Bud and the other scientists and the access each of them afforded to me played an important role in opening my eyes to my own potential and accelerating my growth.
It sounds like your experience as a student had a profound impact on your career. Can you tell us more about that?
While I was a student, something magical happened. I took a statistics course that was then called Biometry, which introduced me to Analysis of Variance. At the time, it was a relatively new statistical tool and had only just become popular because computing costs had come way down. This course was my epiphany. I loved the course.
Back then, most students would sit for hours at the Computer Center punching cards that would program the computer to solve their homework problems. My challenge was that the Marine Science Research Center was on the South Campus, and the Computer Center was on the Main Campus. The bus ride between the two could easily take 45 minutes each way. I needed a more efficient way to get my work done.
Using my Texas Instrument TI-100, a hand-held calculator with 99 programmable steps, I broke the programs for each statistical test into a series of subroutines, each small enough to fit on the calculator. This allowed me to solve these problems in my South Campus office, saving me a lot of time. More importantly, by delving deeply into the math for analysis of variances, I developed an appreciation for the logic behind the tool. I was so excited about my new knowledge that even before the course was over, I started looking for ways to apply my new skills everywhere. I was fortunate to publish research papers with several scientists and professors who used these tools to further their research. These collaborations gave me the confidence to look beyond the opportunities at Marine Sciences.
What inspired you to take the leap and write Risk is an Asset?
I want businesses subject to commodity price risk to become resilient by maintaining appropriate levels of protection. When a company fails, it affects many people. Investors lose money, but employees lose their jobs and sometimes their retirement savings. My hope is that if managers have a better understanding of their risk, they will appreciate the benefits of process risk management and adopt it. Rather than focusing on math, my book explains its application and the utility of risking budgetary performance estimates. I wrote the book in a way that makes it approachable for students, in the hope that they will read and learn from it. These students will be the next generation of business leaders; hopefully, this book will help them prepare for many challenges.
With your degree in marine sciences, you began your career as a research scientist. How does this factor into the work you do today?
One of the great dangers in today’s world is that disinformation is continually being circulated and re-circulated. One publisher will print a knowingly false statement, only to retract it the next day. Unfortunately, before that happens, other news publishers will regurgitate that information as if it were true. This creates a long trail of referenced information that is wrong. Today, we must all challenge and check facts. My training as a research scientist helped me develop into a critical thinker and prepared me for today’s challenge of sifting through multiple and independent sources of information to find the data I can trust.
What advice would you give to students looking to follow in your footsteps?
If you’d like to make a lot of money, solve BIG problems. The bigger the problems you solve, the more likely you are to get paid well. But you also need to be good at solving these problems, so pick something that interests you. I have been fortunate to have loved going to work every day of my life. That allowed me to live a life filled with passion. If you can, make your avocation your vocation. Then you will love your work and have a good chance to become great at it. If there is someone out there who is doing the things you are interested in and good at it, go work for them. Surround yourself with excellence if you want to become an expert. As they say here in Texas, the fruit never falls far from the tree.
So, what’s next for you?
My current focus is to develop a suite of tools that individual investors can use to manage their investments more wisely. The challenge is to make these simple enough for everyone to use yet powerful enough to give them confidence that they will be better off if they proactively manage their investment portfolios.