Ontonix:: WE have every reason to advocate transparency


The Ontonix ‘Corporate Mission’ is clear and there is no better starting point – or time to start – on the road to building a more effective and resilient business – communities – economies – world, than RIGHT NOW!

“In the past few decades we have conceived, designed and constructed extremely complex systems and infrastructures on which our lives depend to a very large degree. The list is endless but it all comes down to…

Check out this 3 minute video from Ontonix

Conventional tools and “wisdom” are inadequate for today’s Complex systems

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The FACTS that lie beyond conventional risk horizon (in graphics)


Uncertainty into usable prob

You must not become complacent with a pattern that works today because new patterns will be needed in the very near future Read more of this post

UK insurance ‘dissected’


I felt compelled to respond to some comments that were prompted by a previous article:

IBM Insurance:: does the industry really care what customers want? I wonder…

The following comments come from a, highly experienced and senior, former insurance executive, who now works for one of the major Global Consulting firms. Obviously I wouldn’t name names without first gaining the approval of the individual in question but I really wanted to share my thoughts. After all that’s why I blog.

For many years I have eagerly anticipated some meaningful debate with thought leaders, passionate or concerned people from within the insurance industry. But I have been, consistently disappointed. I wish I was more confident that these views might spark some meaningful discussion…but I won’t hold my breath!

The comments:

I think David Wilson is making the point that despite the results of the IBM survey, he’s seeing little action from the UK insurance industry. I think at the moment UK and Western European insurers have their hands full with Regulation – Solvency II, RDR – and this is diverting their attention.

Even so, in terms of innovation, UK insurers (or at least Northern European insurers) are seen as leading the global pack in terms of capital effectiveness and optimisation, with the North American market looking to UK as an example of best practice especially in the area of risk management.

My response:

What are the key issues identified:

  1. Compliance with additional Regulation – brought about by cultural, operational and regulatory failures
  2. UK & Europe seen as innovation leaders – based upon the above, should this be the case? And,
  3. capital effectiveness and optimisation – are these correct metrics for innovation and compliance?
  4. risk management – where is the evidence of “best practice”? – I see plenty of evidence of “bad practice” that has become ‘accepted practice’ across the industry. What are current practices in relation to complexity, business resilience and systemic risk?
    Insurance and banking have convinced themselves that they have been/are innovative but, if this is true, why are they the least trusted and most complained about industries according to their customers? Does that not explain the perceived need for more regulation?

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Ontonix: "Optimal does NOT mean best"


Nowadays it is very popular to seek optimal solutions to a broad spectrum of problems: portfolios,  engineering systems, strategies, traffic systems, distribution channels, networks, policies, etc. But have you ever wondered if optimal really means best? Well, it does not. Optimality is not the most convenient state in which to function. The reason?

Optimal solutions are inherently fragile.

Our economy (but not only) is fragile because everything we do is focused on maximizing something (profits,  performance, success) while minimizing something else (risk, time, investment, R&D) at the same time. This leads to strains within the system. Everything is stretched to the limit (or as much as physics will allow). This is exactly what one should not do when facing turbulence. The focus should, instead, be on:

  • Solutions that are fit, not optimal.
  • Simplifying business models and strategies.
  • Accepting compromises not seeking perfection. Improve, don’t optimise.

 

Read the full article: Ontonix – Complex Systems Management, Business Risk Management.

Dogbert does Financial Planning:: applying myth or math?


Dogbert (flaw of large numbers)

Regulators want big, complex banks to hold larger buffers of capital to protect the financial system.

Big banks argue this is unnecessary because risk is diversified across their larger balance sheets.

Who is right? Natural sciences – especially epidemiology, ecology and genetics – provide clues…

 Complex systems: The FLAW of large numbers.

A “law of large numbers” is one of several theorems expressing the idea that as the number of trials of a random process increases, the percentage difference between the expected and actual values goes to zero.

If you REALLY want to get a deeper understanding of probability – and why it is wrong to assume too much from independent events (e.g. the roll of a dice) and apply that knowledge to the real world of inter-connected, non-linear systems – PLEASE check out the “Physics Envy…” presentation by Andrew Lo (link below).

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