BP Report: Black Swan …or just a bird covered in oil!?

Does complexity guarantee “system failure”? (revisited)

Even before this event became highly politicized it was shaping up to stand as a 21st Century monument to a culture of Corporate mismanagement: Economy before ecology! The incentives to “cut corners” were simply too great. I have argued before that, all too often, sound risk management comes a poor second to generating profits.

It tends to be “dressed up” as compromise…until it hits the fan!

Anyone care to draw a line?: Global financial meltdown – Toyota – Gulf of Mexico spill – ???

This was/is a hugely complex operation requiring enormous financial and human resource. A tight chain of command communicating and coordinating across several companies. Undertaking a range of interdependent functions as part of a feat of engineering that would not have been possible just a few years ago. NO SCOPE TO TAKE CHANCES, TO CUT CORNERS OR TO BE ABLE TO CONTEMPLATE GAMBLING WITH THE ECOSYSTEM OF A VAST AREA.

Even a company like Toyota (Lexus), whose reputation for quality was well-deserved, were tempted by the lure of $100m per annum savings! I’m sure someone better informed than me has already worked out what their direct financial losses have been, in addition to fines, settlements and the long lasting reputational damage for a proud brand.

BP said in a statement that the report, like its own investigation, had found the accident was the result of multiple causes, involving multiple companies.

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Complexity: Global Banking – “The Sources of Unpredictability”

I feel it reasonable to reblog my own post (from March 2010) since someone else has identified the wisdom in some comments emanating from Andy Haldane (and Mervyn King) at Bank of England.

Complexity economics and the global financial system

It is worrying though, that the speech referred to took place almost 2 years ago! Still, although Global banking can be brought to it’s knees in a matter of hours – thanks to the systemic fragility that it has created and has been correctly identified by these (and other) learned gents – Rome wasn’t built in a day!!!

Complexity economics and the global financial system

Complexity: Global Banking - “The Sources of Unpredictability” Image via Wikipedia A recent interesting speech by Mervyn King, Governor of the Bank of England, on the “Uncertainty in Macroeconomic Policy Making: Art or Science?” discusses the sources of unpredictability. He goes on to claim that the sources of unpredictability are at least three: “First, it is very difficult to assign probabilities […] This is not the fi … Read More

via Get “fit for randomness” [with Ontonix UK]

CEO = Ceiling of Extreme Opacity? (via insuranceguild)

Unfortunately, it is a recurring theme and this excellent blog item sums up the nature and extent of the problem.

This piece follows on (from a banking perspective) from my own, more broad based, recent blog:

Who ever thought risk was optional?

The PRESSING NEED for cultural change is apparent but I suspect we are going to have to wait until the next (imminent!) crisis…or maybe the one after that…to witness the wholesale acknowledgement that there is a difference between saying and doing the right thing.

In the meantime it’s “business as usual”

The IRM Chairman’s very interesting article on risk culture in the December 2010 Risk Professional Journal spurred me to pen this piece[i]. It has become something of a cliché in risk management to talk of ‘setting the tone from the top.’ In reality, how many organisations really practice what they preach? It is quoted that the most remarkable finding of the RiskMinds 2009 Risk Managers’ Survey was that, ‘risk professionals – on theRead More

via insuranceguild