2011 IBM Global Business Resilience and Risk Study:: cling to the wreckage of failure…or invest for the future?


imageThere isn’t much point in me, again, reiterating WHY “Corporate Resilience” [Nassim Taleb’s “antifragility”] is so important in the Digital Age! So, whilst I am slightly concerned that this report seems to infer this is more of an issue for larger firms, it is probably best I let any interested readers make their own minds up on the matter.

Traditionally, risk management tended to focus on a combination of risk transfer—achieved through insurance or other financial products—and business continuity planning to keep the organization running during a crisis. Beginning in the 1980s some companies started to develop enterprise risk management (ERM) programs building on the “circle of risk” first conceptualized in 1974 by Gustav Hamilton, risk manager of Sweden’s Statsföretag AB. The idea was to link different risk management activities such as identification, assessment, control, financing, monitoring and communication into a continuous process. In many cases, however, each element continued to operate within organizational silos.

The economic downturn beginning in 2008 triggered new interest in risk management, driving adoption of truly holistic approaches where managing risk is inherent to every decision. Today, leading organizations are pushing these concepts further to develop enterprise-wide business resilience strategies. They strive to make the ability to respond rapidly to all kinds of unexpected events—opportunities as well as threats— part of the corporate culture. This means building a business resilience strategy that engages everyone in the organization.

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Zurich Risk Report:: pointing at, NOT “pushing the boundary”!


imageIt is reassuring to know that, when “responsible” insurers, such as Zurich Financial Services, publish reports they don’t gloss-over “uncertainty”! But I am still concerned that, whilst they have the considerable insight and wisdom of Doug Hubbard in their corner, they do little more than (re)define the “problem statement” and point in the general direction of theoretical solutions…

It’s like presenting a High School student with a problem from Quantum Physics, giving them a calculator and telling them to get on with it!!! 

Surely, in the current climate, it is too big an assumption that a business has the in-house resource (time, finance and intellectual) to de-code, interpret and address such problems? These are the same problems that have already laid waste to the major institutions and the reputations of banking and finance organisations, whose “investment” in the finest mathematical minds (outwith Academia) has proven what we already know: attempts to model the future in a complex and inter-connected world are, ultimately, futile exercises.

This does not mean that I am totally against building models but let’s get the facts straight first!

We can’t forecast the future based upon the past

Assumptions are just that! They are, by definition, subjective, even if quantitatively based, and

…in complex [non linear] systems, even minor deviations, can have a MAJOR impact.

As a result, and with all due respect to Mr Hubbard (as well as those whose work he cites), I am not convinced that an unreliable model is vastly better than no model. At least, as far as reliable forecasts on a meaningful timeline are concerned.

The pressing need is for, cost effective, “real world” SOLUTIONS to everyday problems, not answers to questions that are topics of research and debate amongst industry experts and Academics. 

Why systems-thinking and Complexity management are vital for survival


Collapse, if and when it comes again, will this time be global. No longer can any individual nation collapse. World civilization will disintegrate as a whole. Competitors who evolve as peers collapse in like manner.

JosephTainter

The Collapse of Complex Civilisations (1988, p214)

Complexity is a characteristic of dynamic systems. It is the multiple inter-connections, sometimes referred to as the “problem-solving capability”, without which the system cannot perform its intended purpose(s). Every system has a sustainable level of complexity [critical complexity].

Butterfly Effect: Due to the inter-connectedness of systems the impact of a single (even relatively minor) event can be manifest in more than one outcome.

Catastrophic changes in the overall state of a system can ultimately derive from how it is organised — from feedback mechanisms within it, and from linkages that are latent and often unrecognised.

From a report for Federal Reserve Bank of New York Read more of this post

TRUST:: only if “leaders” can walk the talk!


I can’t speak for anyone else but I have always reckoned that TRUST should be pretty high on the agenda for GOVERNMENTS and FINANCIAL SERVICES!? Edelman Trsut attributesIF you still listen to “leaders” from either, they will tell you that IS the case.

Of course they do…and if you really want to tax your brain, consider the liar paradox! [have fun]

According to the old adage, “talk is cheap” and, from relatively early in our development, “easy”. Likewise, walking is another “basic” human skill. We see it happening every day in life and, those of us fortunate enough to have been blessed with the ability to do both, practise them on a daily basis…sometimes, even, simultaneously!

SO, it would be reasonable enough to expect that individuals who have reached the upper echelons of their chosen careers would have no difficulty in doing both?

But, there is growing evidence to suggest that this is not the case. The inability of a leader to “walk the talk” is a reliable indicator of a contaminated culture.

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Survey:: UK insurance “enjoys” a serious lack of trust


Bloody Meerkats and an endless stream of unimaginative and downright infuriating caricatures sums up the “bounded creativity” of an industry whose idea of innovation has been dulled by years of squeezing every ounce of customer value out of products and processes to feed its insatiable appetite for revenue…and, hopefully, underwriting profit!

Insurance: Feed the beast but ignore the elephant

Just be grateful I can't sing too!In particular, the Personal Lines market is so deep in a rut of its own creation that, for all any of us know, this meerkat (I will concede they are cute!) may be a scout sent to see what the terrain beyond the rut looks like.

Well here it is: how could anyone in their right mind trust an industry, whose best interests are served by attracting customers with a “good” risk profile, rewarding their profitability and loyalty BUT insists on spending outrageous amounts on scattergun marketing and incentivising disloyalty, then tries to claw back costs by compromising the integrity of cover and service.

In a recent survey of 400 nationally represented insurance buyers, a clear message has been given that despite all the advertising and hype, there remains a serious lack of trust in insurance providers.

  • Just under 73% believe that insurance providers make the terms and conditions in their policies deliberately complicated.
  • Half believe claims are never paid out fairly.
  • A third believe that insurance providers expect them to lie about a claim.

Looking at the survey it cannot be disputed that price is a real determinant of converting an insurance sale, with 72% of the respondents attesting to this fact.

However we need to look a bit more deeply. We questioned further about what factors are the most important when taking out or renewing a policy, their replies were clear and unambiguous. 89% stated that they look to their provider to be trustworthy and 79% said that it is important for insurance advisors to have professional qualifications related to insurance.