New Book:: ‘Governance Reimagined’ by David Koenig


 

Imagine, if you will, my surprise and delight when I received an email from David Koenig  (Author of the above title) inviting me to share thoughts on the subject matter of his book, from which this brief extract is taken!:

imageComplexity Economics is emerging…we will simply refer to their emerging way of thinking as Complexity. What makes the Complexity group unique is their focus on explaining and showing how value is created: how groups of things work in systems and how those systems interact to make more out of a scarce input like economic capital than existed before. It’s a blend of economics, psychology, biology, physics, and other sciences, and it is contributing to one of the most important developments in finance and economics, ever. You know already that our world is full of complicated systems. However, not all complicated systems are complex systems…”

This and David’s breakdown of the present value equation were enough to have me scrambling to respond to his request before I even got as far as reading an excellent, informed and insightful, 5* Review (click on the link for the full review).

 Koenig’s risk governance infrastructure could bring much more business intelligence to bear by more fully engaging employees and stakeholders. Success depends not only on markets but also on monitoring by stakeholders, necessitating a new level of transparency, which would also reduce the overall cost of the firms economic capital. Adoption of the model may depend on whether or not key power figures wish to enlarge the domain of mutual influence of their organizations. How many are willing to redistribute even a modicum of power to substantially reduce risk?

If the use of the word ‘Complexity’ in the context of economics is new to you, even if you are familiar with the phrase but intrigued by the breadth of the disciplines, be warned, “thinking in systems” can become second nature!  The good thing about that is that it can make so much sense of subjects that, otherwise, appear to have little relevance to what you do on a day-to-day basis. As David points out it is such thinking that is influencing much of the work being undertaken to better regulate banking: evidence the collaboration between Andy Haldane at Bank of England and Zoologist, Lord May!

We can learn a great deal from the complex systems found in nature, whether that be in the honeycomb construction of a beehive, the spread of forest fires or viral contagion. Nature gives us the most resilient biological and ecological systems. Belatedly, we are learning the lessons that our “linear thinking” blocked out. Now many the digital communications, logistics, IT, financial and  business systems that we take for granted are modelled on these, dynamic, non-linear systems…they are robust yet fragile. Contrary to what the hard-nosed bankers and traders, Economists and Accountants would have you believe, sustainability isn’t just for “treehuggers” because, if we can’t rely upon our global ecosystem and its finite resources, trillions of dollars of personal or national wealth won’t save your “sorry ass”!!!

I would urge you to red the paper and/or view the presentation by David Korowicz on the subjects.

Now I can’t wait for my copy of the book because there is much work to be done if concerned Risk Leaders and citizens are to work, interdependently, to play their part in halting an, Institutionally-led,  headlong plunge into the financial abyss!

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