Systemic Risk:: deep collapse in “nested adaptive cycles”

no-trust-300x225I don’t write this blog because I am intent upon coming across as some smartarse, know-it-all, merchant of doom! Rather, accepting the limitations of my own knowledge, I want, as far as is possible, to inform readers (thanks for your interest!) of issues that affect each and every one of us.

I reckon, if I prompt individuals to ask questions of themselves, me,  employer, politicians, trusted advisors or media sources then that is good. If I can answer questions even better. If I cannot, then that may be all the motivation I need to consider a worthwhile topic further or from another perspective. After all, with the communication tools we have at our disposal in the Digital Age, this IS a “Knowledge Economy”.

Part of the problem, that bothers me, is that many of the established sources of information are not as reliable as they would have you believe. Some only see information through the lens of engrained belief systems – a form of blindness. Others rely upon a cocktail of manipulation and, deliberate, misinformation. If this sounds far-fetched please stop to consider: what we have learnt about the culture in Institutions, in whom we were “happy” to trust; how we came to learn of the nature and scale of “abuse”: how long before “abuses” were admitted; why, despite, such as WikiLeaks, Occupy, etc. so little has changed; when we can expect to see perpetrators held to account for their actions?

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Five Reasons Companies Fail at Business Model Innovation – HBR

Several years ago when I first read these words from Clay Shirky they really resonated as far as my own industry [insurance] was concerned.

“It is easier to understand that you face competition than obsolescence”

In the intervening period a great deal has changed…not necessarily for the better. But too much has remained the same. As I read recently “Nowadays, competition is mainly taking place between business models rather than just between products and services…”. It is true.

Business models that are unsustainable but still function in the current environment, are now showing the outward signs of frailty. Fragile businesses lack the agility to adapt for survival in a post-critical financial landscape.

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Presentation: deeper understanding by thinking in systems

“Systems thinking” can help with the understanding of so much in our lives that, we either take for granted, or are content to leave in the “domain” of Academics, experts and specialists. I thought this an excellent presentation on the subject and one that may “whet the appetite” to learn more about the complexity of non-linear systems.


Business owners, finance and risk professionals who continue to think predominantly in terms of linear processes will only succeed in increasing uncertainty in the environments in which they operate…and beyond!

Why? Because it is much easier to stick with an engrained belief system (Mental Model), particularly one that is widely accepted, understood  and applied than it is to question or challenge the norm. Contrarians are as welcome as whistleblowers in firms with something to hide!

What systems thinking illustrates is that, we need to reconsider much of what we know – or thought we knew – about “risk”. We don’t exist in a “Gaussian world” that fits neatly into a bell curve. The fact is that “outliers” in data cannot be discounted. Rare events do happen and their impact can be disproportionately large. Read more of this post

Complex Systems: Business Risk Management

How often do we challenge what we “know” to ensure that our particular “belief system” is based upon the most up-to-date knowledge? Too many of us (I know for I have seen plenty!) are content to get on and do rather than to question and to propose alternative processes or solutions.

This is even more in evidence during the kind of tough times that we are all currently experiencing. The larger the organisation the more likely that questions could and should be asked. But it can be difficult to get a good enough view from your own particular “silo” AND the greater the pressure to keep your head down to just get on and do. Is this why interdependence – working, together, toward the common goal – struggles to survive in such environments?

In some organisations people can go through their entire careers without gaining a better perspective. Those that do, can soar within the company but the fear of being treated like some kind of heretic, insurgent or whistle-blower can stifle initiative and progress, thus perpetuating belief systems that may have been superseded. In “more open” organisations the ability to create, measure, manage and adapt is fundamental.

Operational interdependence IS NO LONGER intangible. Here is an extract and link to a recent Ontonix blog. Please read it and question your individual or business belief system!

What are intangibles? Is it is possible to actually measure them? How can you possibly measure something that cannot be grasped or touched and does not have a physical presence.

The most “popular” intangibles of interest are, for example, know-how, relationships, expertise, knowledge, morale, ethics, justice, collaboration, intellectual capital, etc. Human perceptions and feelings are also intangible but our lives hinge on how we deal with, for example, fear, love, anger, happiness, jealousy, greed, stress, beauty, satisfaction, desire, etc., etc.

If you can’t measure something you can’t really manage it. All you can do is simply “deal with it”. Management implies control and that, in turn, requires a measure. Science gets serious when you begin to measure.

via Ontonix – Complex Systems Management, Business Risk Management.