John Kay:: don’t blame luck when your models misfire


There are still legions of smart people recruited into FS to be put to work on building models that attempt to predict the future…WHY???

We will succeed in managing financial risk better only when we come to recognise the limitations of formal modelling. Control of risk is almost entirely a matter of management competence, well-crafted incentives, robust structures and systems, and simplicity and transparency of design

Basically, according to this quote, what we need to do is, almost exactly the opposite to what we have done for so many years!

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Don’t blame luck when your models misfire – Ft.com


John Kay is, merely, the latest authoritative voice to make points that appear to “fall on deaf ears”. We know they aren’t deaf but they just aren’t prepared to listen to anything that refers to “transparency” or otherwise threatens what has served them so well and that they control!

Can anyone else provide an alternative explanation as to WHY the following would not be a matter of historic record rather than a “plea”?

…We will succeed in managing financial risk better only when we come to recognise the limitations of formal modelling. Control of risk is almost entirely a matter of management competence, well-crafted incentives, robust structures and systems, and simplicity and transparency of design.

Read the full article

World Economic Forum: Risks 2010 – Issues for communities…GET INFORMED


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WEF Risks 2010. The WEF report from January this year is not a matter that should be lost in the “heat” of pre-election bullshit over, what are, essentially local issues.

Of course,  there are HUGE issues, like wars on foreign soil, national debt, unemployment, etc. but much of these are symptoms of a greed culture (the “culture of me”) that marginalises &/or disrespects the needs of the wider community. Manifest in the lack of governance and integrity demonstrated by our political and financial leaders.

Of course in this modern, inter-connected, world “Community” has taken on new – or renewed – meaning  and sit in a number of domains.

Concerned communities representing the “culture of we” should not be distracted by local issues and cannot allow those in the positions of influence to abuse their power in the manner that they have. If we do not press them to pursue solutions to the issues that affect us all, globally, they will content themselves with the smokescreens of name calling, non-dom. residency, televised debates, “leaders wives”(!) and related trivia.

Both of these graphics provide a pretty concise means of gaining a view of the “big picture” AND demonstrate the sheer scale, inter-connectedness and complexity of global world. But, what they also clearly demonstrate to me is that this translates back into our communities an irrefutable INTERDEPENDENCE. A NEED to work together…SELFLESS NOT SELFISH…for a more ROBUST future when the only certain thing is that UNCERTAINTY will impact every domain.

imageIf you would like to view all of the information for yourself please follow this link to a great “info graphic”  that enables you to view the WEF assessment of the various risks from a variety of information yourself.

IF you choose to do that you will note that, whilst I have inserted a graphic relating to “Financial crises” (yes that is plural!) I have not inserted the graphic relating to “Asset price collapse”. Why? Because it would probably look like I was intent on using the most “extreme”, or, in terms of the WEF report, most likely risk to illustrate a point in relation to the urgent for a dramatic overhaul OR ADDITION to the conventional management of risk.

Each and every graphic “snapshot” and every meaningful report on risk (from some of the largest, most prestigious firms, keenest commercial and academic brains) illustrates and refers to increased or increasing complexity and the threat that this brings.

None have yet provided a worthwhile tool with which to commence the process of identifying solutions…