Institutions & Insurance:: physician heal thyself…but do it quick!

English: Visual description of the different l...

English: Visual description of the different layers of complexity in system architecture (Photo credit: Wikipedia)

I have had the privilege of gaining an holistic view of the insurance industry and – armed with the tools that WOULD transform their businesses and our globally-shared future – have had the means to see beyond the symptoms about which the industry, other financial Institutions and Corporations are in denial…

It isn’t a pretty or healthy picture and the time to change is running-out!

As far as I can determine, we got to this point, primarily, because business leaders don’t know any better!

How could they when, at Business School, they learn what they are taught: knowledge is NOT understanding. And what they have learnt is economic theory that is based upon naive assumptions. Then, in commerce, are incentivised to pursue short-term results and to squeeze every last drop of profit, without conscience or consideration of the wider social and ecological consequences. It is what they see in practise on a day-to-day basis, are told by (equally ignorant) Consultants or read in the Management books of leaders from a less inter-connected era. They should be a dying breed but, instead are left to kill at will!

Zurich Risk Report:: pointing at, NOT “pushing the boundary”!

imageIt is reassuring to know that, when “responsible” insurers, such as Zurich Financial Services, publish reports they don’t gloss-over “uncertainty”! But I am still concerned that, whilst they have the considerable insight and wisdom of Doug Hubbard in their corner, they do little more than (re)define the “problem statement” and point in the general direction of theoretical solutions…

It’s like presenting a High School student with a problem from Quantum Physics, giving them a calculator and telling them to get on with it!!! 

Surely, in the current climate, it is too big an assumption that a business has the in-house resource (time, finance and intellectual) to de-code, interpret and address such problems? These are the same problems that have already laid waste to the major institutions and the reputations of banking and finance organisations, whose “investment” in the finest mathematical minds (outwith Academia) has proven what we already know: attempts to model the future in a complex and inter-connected world are, ultimately, futile exercises.

This does not mean that I am totally against building models but let’s get the facts straight first!

We can’t forecast the future based upon the past

Assumptions are just that! They are, by definition, subjective, even if quantitatively based, and

…in complex [non linear] systems, even minor deviations, can have a MAJOR impact.

As a result, and with all due respect to Mr Hubbard (as well as those whose work he cites), I am not convinced that an unreliable model is vastly better than no model. At least, as far as reliable forecasts on a meaningful timeline are concerned.

The pressing need is for, cost effective, “real world” SOLUTIONS to everyday problems, not answers to questions that are topics of research and debate amongst industry experts and Academics.