Risk or Uncertainty:: which are we confronted with now?
Thursday, 30 August, 2012 1 Comment
Listen to the “risk management” fraternity and they will tell you that they know what they are doing, blah, blah but I can, emphatically tell you that THEY DO NOT!
Here is what, the late, Hunt Taylor (former Hedge Fund Manager) had to say about the markets prior to his death in 2006:
“Let us start with what we know. First, these markets look nothing like anything I’ve ever encountered before. Their stunning complexity, the staggering number of tradable instruments and their interconnectedness, the light-speed at which information moves, the degree to which the movement of one instrument triggers nonlinear reactions along chains of related derivatives, and the requisite level of mathematics necessary to price them speak to the reality that we are now sailing in uncharted waters….
“I’ve had 30-plus years of learning experiences in markets, all of which tell me that technology and telecommunications will not do away with human greed and ignorance. I think we will drive the car faster and faster until something bad happens. And I think it will come, like a comet, from that part of the night sky where we least expect it. This is something old.
“I think shocks will come, but they will be shallower, shorter. They will be harder to predict, because we are not really managing risk anymore. We are managing uncertainty – too many new variables, plus leverage on a scale we have never encountered (something borrowed). And, when the inevitable occurs, the buying opportunities that result will be won by the technologically enabled swift.”
Underestimating uncertainty (by assuming it as risk) could be the most costly mistake a business leader can make! Building resilience into an organisation is the only sound approach for uncertain and turbulent economic times. But that means that the organisation needs to have redundancy built-in but where, how much, for how long???
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- Insurance:: “Future risk” and technology [CII report] (fitforrandomness.wordpress.com)
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- Ontonix roadmap for:: the long and winding road to enlightenment (fitforrandomness.wordpress.com)
- Zurich Risk Report:: pointing at, NOT “pushing the boundary”! (fitforrandomness.wordpress.com)
- Complexity: structural engineering for business survival (fitforrandomness.wordpress.com)
- Dave Snowden:: anticipatory awareness – seizing opportunity avoiding threats(fitforrandomness.wordpress.com)
- Risk Management: adding to uncertainty! (fitforrandomness.wordpress.com)
- Even when the DNA is similar “we can’t fix today’s problems with yesterday’s tools”:: Part 2(fitforrandomness.wordpress.com)
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- Still subjective, still correlation but getting closer… :: Accenture identify characteristics of “The Risk Masters”(fitforrandomness.wordpress.com)
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