Updated – Complex Systems and Ecology: Report by US National Academies…

If you don’t already know WHY I am so intent upon “banging on” about complex systems then you must have stumbled upon this item quite by chance! If so…welcome! I sincerely hope that you will take on board a lesson that WE NEED TO LEARN.

But this blog is not merely about recycling someone else’s words just to look smart or well-informed. There is a “greater purpose” and that is to alert people, not just to the problem but to the solution that we, at Ontonix have developed. S-l-o-w-l-y an understanding of the need for an entirely new view is gathering momentum and Ontonix have the tools to: map interdependencies; measure [their] effectiveness; manage robustness; monitor complexity within systems. Conventional risk management tools, risk and rating methodologies are no longer adequate.

Quantitative Complexity Management is advanced risk management

Well before this recent crisis emerged, the US National Academies/National Research Council and the Federal Reserve Bank of New York collaborated on an initiative to “stimulate fresh thinking on systemic risk”. The main event was a high-level conference held in May 2006, which brought together experts from various backgrounds to explore parallels between systemic risk in the financial sector and in selected domains in engineering, ecology and other fields of science. The resulting report was published late 2007 and makes stimulating reading.

Supply Chain conduit for Corporate Sustainability initiatives

If you haven’t already realised that, independent of Governments, Corporations are actually “stepping up to the plate” when it comes to SUSTAINABILITY your eye may be off the ball!

One of the most effective means for Corporations to communicate their message is through their, increasingly complex (globalised), supply chain networks…

KEY PHRASES WORTHY OF NOTE: value chain; opportunities; together; reduction; risks; standard; reporting;  competitive advantage; differentiation; credibility; transparency; contribute

Companies Complete Test of New Global Greenhouse Gas Accounting Standards

Back in January, 62 companies from multiple sectors and 17 countries started road testing two new GHG Protocol standards developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD).

In June, the companies submitted written feedback on their usability along with final GHG inventory reports, and a summary of the feedback is now posted on the GHG Protocol website.

The two new GHG Protocol standards –the Product Lifecycle Accounting and Reporting Standard and the Scope 3 (Corporate Value Chain) Accounting and Reporting Standard – provide methods to account for emissions associated with individual products across their life-cycles and of corporations across their value chains.

Overall, both new standards received high marks from the companies that road tested them. According to the WRI, most agree that the standards help with:

• identifying GHG reduction opportunities and prioritizing reduction efforts,

• engaging suppliers and enabling supply chain GHG management,

• understanding risks and opportunities associated with emissions in the supply chain,

• creating competitive advantage and product differentiation, and

• improving credibility and transparency in GHG reporting.

“We’re really looking forward to having a standard that can be used globally, for communication across a broad range of stakeholders,” says Robert ter Kuile, senior manager of energy and climate change at PepsiCo. “Road testing the Product Life Cycle Standard has enabled us to engage with other multinational organizations and to join in conversations with NGOs, governments, and academic institutions. When you bring these organizations together, to write a standard, that is going to be the standard that everybody follows and PepsiCo wanted to make sure that we not only learned from the process, but that we also had the opportunity to contribute.”

The next steps will be to revise the standards based on the feedback submitted in June, as well as on the Steering Committee and Technical Working Groups. The revised standards will be released at the end of September for a 30 day public comment period. The text will be finalized at the end of 2010 and the final versions will be published by March 2011.

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Taleb: Government Deficits Could Be the Next ‘Black Swan’

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NNT tends to be worth listening to even if this conclusion wont surprise too many!

Interestingly our own, unique, Ontonix analysis measures the fragility of the structure of the individual economies of EU member states as well as of the “EU system”. The updated report for Q4 2009 is available for FREE DOWNLOAD on our website. Q1 2010 EU Structural Fragility Report. NOW AVAILABLE for €199.

I was, somewhat, startled when, at a recent meeting, one of the most “in demand” Global financial risk experts, in a very matter of fact manner, said that we are only months away from the first sovereign defaults within the Eurozone. Not one of the more obvious contenders. Perhaps less surprising, is that some US states will also default.

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Taleb has published a new version of his 2007 best seller The Black Swan. The second edition includes a new 73-page essay, “On Robustness and Fragility.” Businessweek.com interviewed Taleb in early July about his views on investing and the dangerous Black Swans—i.e. unpredictable events with big consequences—that could lie in wait for financial markets.

What are are potential sources of fragility or danger that you’re keeping an eye on?

The massive one is government deficits. As an analogy: You often have planes landing two hours late. In some cases, when you have volcanoes, you can land two or three weeks late. How often have you landed two hours early? Never. It’s the same with deficits. The errors tend to go one way rather than the other. When I wrote The Black Swan, I realized there was a huge bias in the way people estimate deficits and make forecasts. Typically things cost more, which is chronic. Governments that try to shoot for a surplus hardly ever reach it.

The problem is getting runaway. It’s becoming a pure Ponzi scheme. It’s very nonlinear: You need more and more debt just to stay where you are. And what broke [convicted financier Bernard] Madoff is going to break governments. They need to find new suckers all the time. And unfortunately the world has run out of suckers.

Continue Reading

Please visit Econtalk to listen to the podcast &/or read some of the text and comments: Taleb on Black Swans, Fragility, and Mistakes

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Excerpts from Taleb’s lecture at Oxford
Too Big to Fail, Hidden Risks, and the Fallacy of Large Institutions

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What next for the Sustainable Development Commission?

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On 22 July, Defra announced that it is to withdraw its funding for the Sustainable Development Commission from the end of the financial year.

Discussions are still taking place in the three Devolved Administrations to decide how the work of the SDC in Northern Ireland, Scotland and Wales will be taken forward.

However, Defra has indicated that it plans to mainstream sustainable development within Government.

» Read SDC Director Andrew Lee’s letter to all SDC stakeholders
» Read SDC Chair Will Day’s response to the announcement

UK Government’s progress towards sustainable operations saves £60-70m a year
The SDC’s fifth annual watchdog report reveals that, by running their operations more sustainably, Government Departments are saving money as well as reducing energy and water consumption, emissions and waste.

» Read more

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