Insurance Industry:: Innovation, transformation or failure

If you have visited my blog before you will already know that I have spent some considerable time researching and commenting upon a wide of topics that, although many within insurance fail to see the connection, are related directly related to the insurance industry.

In truth, my work was initially prompted by concerns (a deep dissatisfaction may be more appropriate!) about how the insurance (particularly broking) operated: structure; culture; regulation; remuneration levels; use of IT; cover; pricing of RISK. It was only as I delved deeper into the subject matter, a form of ‘root cause analysis’ [RCA] – causality being particularly pertinent to insurance! – that I came to fully appreciate HOW DANGEROUSLY LIMITED the understanding and application of a probability-based assessment of risk truly was. Especially when the business environment has, fundamentally and irrevocably, changed.

If a future event will take place, it will do so irrespective of the probability that we may have attached to it. If an extremely  unlikely event will happen, it’s probability of occurrence is already 100%

Having been introduced to Complexity (by Dr Jacek Marczyk, Founder of Ontonix srl) and it’s relationship to risk and uncertainty my RCA led me to investigate from a (more rigorous) scientific and mathematical perspective. Eventually into the realm of the behaviour of Complex Systems and, inevitably, to Systems Thinking. Gradually, the understanding, that comes from viewing life and work through the Systems lens, revealed that much of what is wrong with Financial Services stems from unnatural interventions.

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Why not “constructive transparency”?

I recently came across a very interesting article that brought to my attention a phrase I hadn’t come across before: constructive ambiguity.

Isn’t that an oxymoron???

The article is here and it touches upon a topic and writers I have written about before in relation to business as war. If you like you economics with a social conscience and a philosophical perspective Ashwin’s your man.

“The interaction between the market participants, and for that matter between the market participants and the regulators, is not a game, but a war.”

Rick Bookstaber

However, in this article ‘constructive ambiguity’ was being used in terms of preventing moral hazard within a regulatory regime.

That’s when it struck me! Why not constructive transparency?


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Improve Profitability & Reduce Risk — Thrive in a Recession [Forbes]

Feeling vindicated is pretty satisfying but being fully vindicated in print is a new level. HOWEVER, when an article appears in Forbes THAT IS SPECIAL. Then to top it all off the author name-checks Ontonix, our CTO (and Founder) and our services. WOW!!!

Let’s face it if I had written this article very few would even read it and bold claims about complexity management: increasing profitability; reducing risk; building resilience, etc. would be dismissed as “too good to be true” or marketing BS!

But, depending upon your perspective,  this is all the incentive a CxO should need to investigate the subject matter – to gain an insight into just how damaging excessive complexity is to a business OR, it is all the justification required to contact Ontonix.

It is now 3+ years since I wrote The Complexity Crisis, which sounded the “alarm” about how companies were losing profits, creating self-induced problems (with the best of intentions), while searching for growth in no-growth markets. Many companies were confusing proliferation with innovation, and overlooking hidden costs all over the place, because none of the standard accounting systems make them easy to identify. These errors have not damaged the top line (revenue) as much as the bottom line (net profit), but make no mistake about it; both have been adversely affected by unmanaged complexity. The issue now is what to do about that problem.

via Improve Profitability & Reduce Risk — Thrive in a Recession – Forbes.

The long and winding road to: Enlightenment? (via Stupor Complexus)

As “ringing” an endorsement as Ontonix could ask for…from one who knows:

“Starting to see light

The road will likely consist in abandoning the evocative but misleading epistemological debates, and focusing instead on useful techniques to tackle the growing non-linear distortion of the business world, as it happens in econophysics, leaving the reforms of the scientific paradigm to whomever should be concerned (tèkne tòn teknòn kai epistème tòn epistemòn…). On that road, I am particularly interested in two approaches which I came across in recent years.

One is Ontonix (a company in which I have no involvement but admiration for the genius of its founder, Jacek Marczyk), which has developed a holistic risk-monitoring software. What I like about Ontonix, despite a few humble methodological reservations of mine, is their pragmatism and quantitative orientation. Ontonix do not “talk” of complexity: they measure it, based on a conceptual framework in which it is seen as an intrinsic property of systems, like temperature or pressure. Physical quantities, says Ontonix, attain scientific dignity when they are measurable. Epistemological objections can be raised concerning the definition of complexity, as well as methodological ones related to the metrics. But who cares about the hair in the soup, if we are offered an inexpensive tool that can provide, with a surprisingly small organizational effort and a simple user interface, an assessment of the systemic risk of our business? I do recognize a breakthrough in Ontonix, the first measure ever of a company’s «stability rating».”

…a growing minority of business/managerial economists consider Taylorist scientific management (which has made it to the present day through various mutations and enrichments) as still plagued by extreme mechanism and unaware of the lessons coming from complexity science (deterministic chaos, emergent behavior): they therefore believe that it should be replaced with models inspired by non-linear dynamical systems, non-equilibrium thermodynamics, agent-based simulations and other modern “complex” tools.… Read More

via Stupor Complexus

Amazon Kindle ebooks: required complexity reading

Dr Jacek Marczyk, CTO and Founder of Ontonix has written several books during his illustrious career – I don’t know how he finds the time! – more recently these have, unsurprisingly, been on the subject of complexity. His work and that of the original Ontonix team has broken new ground and enabled Ontonix to provide solutions to some of the best known brands on the planet.

For those who thirst for further knowledge on, what is a fascinating, infinitely relevant and topical subject, here are the the relevant links:

Practical Complexity Management A New Theory of Risk and Rating

Ontonix have succeeded in creating a rigorous, 100% quantitative, “hard science” means of measuring complexity [structured information] and entropy [chaos or uncertainty] within systems. This has been applied in a wide variety of fields, from Healthcare to critical business processes incl. IT system monitoring – product design and testing – Petro-chemical – Aviation – Aerospace – Air Traffic control – Financial stability rating – ecosystem & interdependence mapping…we are always looking for other areas for future development so feel free to share any ideas applicable to your sector or industry:

As a result we are able to provide Complexity Facts that others have, so far, only been able to surmise. Every dynamic [non-linear] system has a current and critical level of complexity and measurement is the first step on managing .

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