Risk Management:: we have one history but multiple futures – can we “fix” it?


OK, so, in Economics and Finance we hear a great deal about “models”. Despite the obvious and much written about, failings, great store is put in their accuracy and ability to predict…even though, we already KNOW that, meaningful prediction about future events, based upon past events and outcomes, IS NOT POSSIBLE! 

We are [still] in crisis and surrounded by increased volatility, uncertainty, complexity and ambiguity: most of it of our own making.  The need for CHANGE, to give us hope worth clinging to, is even more pressing. But…

…we can’t begin to rebuild trust, an industry or economies without reliable tools:

Financial and Political mismanagement, misinformation, manipulation and mis-selling brought us to this point and mere rhetoric about “change” cannot mask these facts!

TRUST needs a foundation: the failure of past models, techniques and tools tell us that, without TRANSPARENCY, we need evidence from those that claim the ability and desire to (re)build a RESILIENT and SUSTAINABLE future.

One in which the integrity of the entire “structure” is ROBUST from the bottom up, or inside out [i2o].

2 Responses to Risk Management:: we have one history but multiple futures – can we “fix” it?

  1. David, this needs to be spelled out more clearly:

    ‘POLITICAL MISMANAGEMENT OF STATE BUDGETS BROUGHT US TO WHERE WE ARE!’

    The financial system was just coerced to play along with the promises of large profits that then again are fed back into the political system as corrupt funds.

    And yes, prediction of the future based on the past is NOT POSSIBLE. Tell that to the predictive analytics folks. But it is not a failure of models, rather a failure of principles. Models used to provide understanding might not be perfect but still useful.

    Thanks, Max

  2. Good to get your “take” Max and hard to disagree with what you say.

    ALTHOUGH, I can’t help but feel that, if there is a “master and servant” relationship at work – aren’t they two sides of the same coin? – I am more inclined to side with former US President, Woodrow Wilson, when, in 1913, he was talking about banks at the “birth” of the Federal Reserve.

    “Since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the US, in the field of commerce and manufacturing, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it”.

    The Overlords of the Financial Sector lobbied hard and at great expense, for “lighter” Regulation and with it, the ability to mis-sell debt as credit, thus creating the illusion of “financial independence” and well-being amongst voters. The pay-off to Politicians, in the short term, being an artificial economy buoyed with increased tax revenues (to be mismanaged) and, for the future, a clear career path to high office, etc. in some strand of banking. Of course all of this aided and abetted by Ratings Agencies.

    Irrespective of which party hatched the cunning plan to exploit and profit from human weakness they are, undoubtedly, co-conspirators! Would this, perhaps, explain the lack of any meaningful corrective steps, custodial sentences, stc?

    Rather than earn the loyalty of “the masses” through quality of products and service it was even more profitable to create dependence through indebtedness…until “the levee broke” and the true scale of Institutional abuse became apparent.

    How does that rank in the spelling it out stakes Max?

    Best

    David

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