Complexity and Consequence: what financial and risk engineers MUST learn from mech. eng. (or anywhere)


Gadget craziness

Image by XuRxO via Flickr

Recently, I have found myself writing about the importance of ADAPTABILITY* & RESILIENCE in complex (business) systems. This is, partly, due to the fact that, the acceptance of the “shortcomings” of current risk models and tools, are becoming more widely “recognised” (in some instances “admitted”)!

*Boston Consulting Group recently cited “Adaptability: the new competitive advantage”.   

The number of Consultancies that – after many years of profiting from preaching the merits of (now-discredited) models and strategies – have now discovered, and wish to share, their “new found” expertise in “complexity theory” and “systems thinking”.

Unfortunately, their participation in the education process wont undo the damage done!

WE should be grateful that the damage their contribution to the prevailing culture has done is substantially reduced and that a higher level of business understanding is, increasingly, on the agenda.

However, I suspect that we have not seen the last of Consultancies promoting and implementing “solutions” that make (business)  systems and economies more fragile…because there are fees to be earned! Read more of this post

The conundrum facing insurance [courtesy of Clay Shirky]


If guys like Clay Shirky and Seth Godin “did” economics we wouldn’t be in the mess we are in now! These guys don’t think about critical issues in the conventional, College-taught, manner of an unreal world. They focus upon the world AS IT IS, AND NOT HOW WE CONVINCED OURSELVES IT WAS!

The challenge for, such as insurers, is how to embrace the lessons of the “the Digital Age” and to redesign the current, unsustainable, model. Read more of this post