Risk: If we already “know” what we can’t but…


Rodin's The Thinker at the Musée Rodin.

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…can, no longer, be sure of what we think we know, what do we actually know that is of any use to anyone relying upon our expertise?

No this isn’t an introduction from Donald Rumsfeld as a guest blogger but part of a serious question that, if isn’t answered correctly poses hard questions for the future of our industry.

Perhaps some explanation would help: we “know”, (well, understand) that we cannot predict the future – which could be pretty worrying for an industry whose success or failure relies upon the frequency and impact of a variety of events that haven’t yet and may never happen. But, in the absence of “special powers”, we have relied upon what we know i.e. what we can learn from the occurrence of similar events, in the past. We now have vast quantities of data, accumulated over many years by a wide variety of sources. The type of information with which Statisticians, Actuaries, Economists, Carol Vorderman can have hours and hours of fun with, aided by tried and tested techniques and the most sophisticated technology in our history.

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Financial Complexity, Part 1 – Seeking Alpha


Image representing Seeking Alpha as depicted i...
Image via CrunchBase

…taking a broad look across the financial system, it is possible to identify at least six – in many respects intertwined and overlapping – sources of complexity: technology, opacity, interconnectedness, fragmentation, regulation and reflexivity

via Financial Complexity, Part 1 – Seeking Alpha.