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.