Black Swans: A Corporate Governance “blind spot”


“FIT FOR RANDOMNESS” is all about accepting that complexity adds to the uncertainty – and, therefore, risk – of modern living. We CANNOT predict what will happen but that does not mean that we should not prepare, as best we can, to survive the unforeseen by building robustness [resilience or anti-fragility] into the complex, dynamic, systems upon which we depend.

Dr. James Carafano of the Heritage Foundation spoke to this issue at a congressional hearing on resilience in the homeland in 2008. He said, “The current paradigm of ‘protecting’ infrastructure is unrealistic. We should shift our focus to that of resiliency. Resiliency is the capacity to maintain continuity of activities even in the face of threats, disaster, and adversity.”

Any, self-respecting, C-Level Executive (or non-Exec.) worthy of the office, should assess and detail their strategy for corporate survival. Failure to do so is to expose the business, its stakeholders, professional reputation and with it, personal wealth, family and community stability to undue risk. From that perspective (alone) I tend beyond the questions (shown below) from the International Federation of Accountants.

I am used to getting “funny looks” when I suggest that QUANTITATIVE COMPLEXITY MANAGEMENT [QCM] from Ontonix is more than a means for an organisation to extend its “risk horizon” – beyond the scope of conventional ERM. QCM, or Advanced Risk Management, facilitates better, more consistent and robust, business [risk] decisions. In the process, securing that most precious of commodities, “competitive advantage”.

Here are some complexity facts from Ontonix.

US Financial World War (Part 5): Nassim Taleb spells it out AGAIN…


Is Bernanke merely implementing a “Nick Leeson strategy” by gambling with the retirement funds of Pensioners and our future generations – socialising debt? I think so and so do plenty of other people better qualified to comment than I.

It is understandable that NNT cannot hide his frustration!

When US should be working toward ensuring robustness [resilience] they are, almost certainly, creating fragility.

 Will this come to be known as the biggest self-serving act in economic history?

Fed don’t “recognise” the non-linearity [dynamic and complex] of global economy

 

On the off chance that someone taking the time to read this blog (thanks) doesn’t already know who NNT is these will give you some clues as to what he is about. He developed ten principles to help make societies more robust to Black Swan events:

1. What is fragile should break early while it is still small. Nothing should ever become Too Big to Fail.

2. No socialisation of losses and privatisation of gains.

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks.

5. Counter-balance complexity with simplicity.

6. Do not give children sticks of dynamite, even if they come with a warning.

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”.

8. Do not give an addict more drugs if he has withdrawal pains.

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement.

10. Make an omelette with the broken eggs.

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US Financial World War (Part 5): Nassim Taleb spells it out AGAIN…


Is Bernanke merely implementing a “Nick Leeson strategy” by gambling with the retirement funds of Pensioners and our future generations – socialising debt? I think so and so do plenty of other people better qualified to comment than I.

It is understandable that NNT cannot hide his frustration!

When US should be working toward ensuring robustness [resilience] they are, almost certainly, creating fragility.

Will this come to be known as the biggest self-serving act in economic history?

Fed don’t “recognise” the non-linearity [dynamic and complex] of global economy

On the off chance that someone taking the time to read this blog (thanks) doesn’t already know who NNT is these will give you some clues as to what he is about. He developed ten principles to help make societies more robust to Black Swan events:

1. What is fragile should break early while it is still small. Nothing should ever become Too Big to Fail.

2. No socialisation of losses and privatisation of gains.

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks.

5. Counter-balance complexity with simplicity.

6. Do not give children sticks of dynamite, even if they come with a warning.

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”.

8. Do not give an addict more drugs if he has withdrawal pains.

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement.

10. Make an omelette with the broken eggs.