Beware the “Business as Usual” mentality!:: Grant Thornton risk report


“The evidence is that the current heightened risk management activity is part of the traditional cycle associated with economic downturns rather than a fundamental rethink. I am concerned that the corporate world has not learned the lessons.”

Grant Thornton

Atul Gawande:: Failure and Rescue – The New Yorker


Management of Complexity

Unless I’m very much mistaken this extract, from a truly inspiring piece of writing – from Atul Gawande, author of The Checklist Manifesto – reinforces THE lessons we all need to learn:

"Practise without sound theory does not scale"

It is not sufficient to assume that the appearance of knowledge (including statistical correlations) at physical, conscious* or "superficial" level alone is a reliable basis for decision-making when dealing with high complexity.

“High complexity is incompatible with high precision” – this is known as L. Zadeh’s Principle of Incompatibility

Our (conscious*) cognitive ability is limited so, dealing with complexity, requires synthesis of brain and the sub-conscious mind (our experiential memory): Creative Intelligence – curiosity, cognition and intuition.

Vital systems, networks and sub-systems within complex systems can be invisible to conventional tools. To learn about them requires observation which drives innovation. Because decisions required to maintain the health (or resilience) of complex systems are often counterintuitive so require "deeper" observation e.g. MRI scan, insight and understanding of (causal) interconnectedness.

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Warren Buffett urges more insurance underwriting discipline…


There isn’t much I could add to the words of “the Oracle”…

“At bottom, a sound insurance operation requires four disciplines:

(1) An understanding of all exposures that might cause a policy to incur losses

(2) A conservative evaluation of the likelihood of any exposure actually causing a loss and the probable cost if it does

(3) The setting of a premium that will deliver a profit, on average, after both prospective loss costs and operating expenses are covered

(4) The willingness to walk away if the appropriate premium can’t be obtained,”

the letter states. “Many insurers pass the first three tests and flunk the fourth. The urgings of Wall Street, pressures from the agency force and brokers, or simply a refusal by a testosterone-driven CEO to accept shrinking volumes has led too many insurers to write business at inadequate prices. ‘The other guy is doing it so we must as well’ spells trouble in any business, but none more so than insurance.”

via Warren Buffett urges more insurance underwriting discipline… « Get “fit for randomness” [with Ontonix UK].

Coping with turbulence:: more theories and maths?


 

Isn’t it time to review our theories on economics, to see them in a radically different light? What lessons are we learning from this and other  crises, if any at all? 

“…how can you run and govern a fuzzy, chaotic and increasingly complex system of planetary proportions that cannot be embraced by contemporary mathematics? And without one central government. While this does not pretend to be a complete recipe, we may do the following:

Since complexity is growing fast, and because excessive complexity is the source of fragility, we should start monitoring complexity at all scales and wherever possible”:

financial products (derivatives in particular)

corporations

banks

markets

national economies

systems thereof

via Ontonix – Complex Systems Management, Business Risk Management.

The Rise of the New Economy Movement


Realisation of the need for and, more importantly, the WILL to (re)build a “Social Economy” is widespread in USA and, with every new episode of Institutional greed, the spread of financial and social inequality is accompanied by growth in the calls for seismic change…anything less will fail!

The price of “Irresponsible Capitalism” has been socialised…but, the malignant culture prevails: BAU – Business As Usual!

“Responsible Capitalism” begins at local, Community, level. A resilient, interdependent, “Biological Model” based upon sound economic theory.

Just beneath the surface of traditional media attention, something vital has been gathering force and is about to explode into public consciousness. The “New Economy Movement” is a far-ranging coming together of organizations, projects, activists, theorists and ordinary citizens committed to rebuilding the American political-economic system from the ground up.

The broad goal is democratized ownership of the economy for the “99 percent” in an ecologically sustainable and participatory community-building fashion. The name of the game is practical work in the here and now—and a hands-on process that is also informed by big picture theory and in-depth knowledge.

Thousands of real world projects — from solar-powered businesses to worker-owned cooperatives and state-owned banks — are underway across the country. Many are self-consciously understood as attempts to develop working prototypes in state and local “laboratories of democracy” that may be applied at regional and national scale when the right political moment occurs.

The Rise of the New Economy Movement.