Floods:: will the insurance industry redeem or condemn itself?


When it comes to preparing for, coping with or recovering from, flooding it is highly recommended that property owners AND insurers listen to experts, such as our very own, Jeff Charlton …rather than to organisations peopled by …

individuals whose self-interest consistently supersedes the interests of their colleagues – clients – congregations – students – customers – members – citizens and IS the biggest threat to their own interests as well as our shared future!

Do so and, whether insurer or insured, you may be well on your way to coping with or avoiding nasty issues that impact both wealth and health.

Jeff Charlton, Flood/Disaster Expert and member of AIBC Executive Leadership Team

 

Jeff is a genuine expert and thought leader who, like myself, has experienced the frustration of challenging the bases of “conventional wisdom”, that serve as no more than a veil for self-preservation strategies!

The discredited financial models and ‘known to have failed’ theories, that underpinned the weaving of the ultimate case of institutional mis-selling, need to be understood…the route from democracy to kleptocracy.

A succession of indoctrinated (misguided) leaders have abused the trust placed in the institutions they lead. Instead of remaining true to their original purpose, self-interest and the position to indulge their appetites for wealth and power, enabled them to exploit and corrupt ‘command and control’ hierarchies.

Pursuit of short-term results and the excessive, skewed, incentives they structured as their rewards, led to an abandonment of Governance [loss of control].

Despite the growing societal cost, maintaining the status quo with artifice is deemed preferable to, transparency and change.

Through years of war and massive economic growth, we saw, instinctive, human interdependence compensate for the linearity of thinking and processes in the post-industrial era. But the task of distributing debt disguised as credit required creation of the myth of financial independence.

It was a carefully constructed strategy to fund and profit from turning citizens into consumers: and consumers into addicts…because indebtedness = dependence. Easier to control.

They had not reckoned on becoming addicts themselves!

If this helps even one person understand why an organisation might perceive TRANSPARENCY as a threat and explain the, otherwise inexplicable, preference for highly complex, high cost and ultimately ineffective regulation, then the scale of ambiguity [misinformation] may be becoming apparent.

As ignorance is replaced by knowledge, the understanding of business (and life in the Digital Age) as networks of complex systems, that are dynamic [non-linear], fractal and ‘self-organising’ networks of sub-systems reveals the wisdom of INTERDEPENDENCE. 

Innovation NOT innovation

What’s the difference I hear you ask!?

The former, is an ongoing process of “creative destruction” [adaption; evolution], guided by stakeholder needs and exogenous factors [exaption] – feedback from business ecosystem and wider environment. It benefits the organisation through its stakeholders, maintains variety and adaptability. Vital for a resilient, sustainable, operation.

The latter is the variety practised by leaders of the prevailing culture. It is the form of innovation that can affect short term results and is driven by endogenous [internal], often financial, demands: ’destructive creation’  by attempting to manage the system without first understanding the causal relationships – that give it its current complexity and resilience – is to constrain the system. Prevailing solutions lack the requisite variety {Ashby’s Law] to measure, manage and monitor systems whose complexity is greater.

The solution lags the problem…

The problem is the solution…

the solution lies in its complexity,

the effectiveness of interdependent processes

and, therefore, it’s resilience

it’s instinct to survive

to be sustainable

Is THAT not the common goal!?

A PURPOSE

If the tools that can provide insight into highly complex biological and man-made systems, are already proven in these rigorous environments it has NUMEROUS applications when assessing the integrity of a complex business or financial system. So, what reasons could you possibly find for firms, involved in assessing and managing financial risks to persist with the myth of knowledge about the complex systems?

Just ‘cause you’ve got glasses you don’t stop getting your eyes checked!

They may look the same, according to conventional wisdom but if we already know that we cannot predict the future and, even if there were a 1% chance of that, it is NEVER going to happen that any attempt to predict is based upon such small data samples of events that have a miniscule chance of ever recurring

YOU NEED THAT, MORE DETAILED AND MEANINGFUL, INFORMATION AND IF THE CUSTOMER HAS TRANSPARENCY AS A BASIS FOR TRUST, EACH CAN SHARE THE RISK AND REAP THE REWARDS OF MULTIPLE, MORE RESILIENT, SOUNDLY BASED [INTERDEPENDENT] RELATIONSHIPS. A BASIS FOR BUILDING AND SPREADING SYSTEMIC RESILIENCE ACROSS LOCAL NETWORKS AND A VIRTUAL COMMUNITY OF LIKE-MINDED RISK LEADERS,

LEADERS WITH THE INSIGHT TO EMBRACE THE PURPOSE AND TO WORK TOWARD THE COMMON GOAL

Businesses need to adapt from ‘inside to out’ [i2o], so the vast resource that is wasted on modelling a future – that is under constant construction, and reducing the excessive complexity, generated by THE ‘UNINTENDED CONSEQUENCES’ of  hierarchical business structures and the culture, tools and belief systems that evolved during our post-Industrial era – to manage people and linear processes, being applied when they are less complex than that which they are attempting to ‘regulate’: Law of Requisite Variety

In the Digital Age, it is about aligning operations to support the effectiveness information-flow among interdependent processes. Attempts to manage a highly complex, non-linear system without sufficient insight can add complexity and hurt resilience.

Institutions have become more inter-connected, as they strive to satisfy demands for increased functionality and speed. But, as they have become more complex, we now know that, over the longer term, these closely-coupled institutions lose adaptability and resilience. They are particularly fragile and susceptible to systemic risk.

JUST A FEW THINGS I WANTED TO OFFLOAD! THANKS.

What do you think? Am I mad or is this how it is?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s