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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Insurance:: “Future risk” and technology [CII report]


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image30 yeas ago (and for much of the intervening period!) I never thought I would utter the words, “what a great report from CII” but there you are, I’ve done it now. I’m the “sad” insurance man I never wanted to be.

Well, not quite, because I am very much an outsider as far as the insurance industry stands right now. The main reason being that too many people on the inside don’t want to hear, like or understand what I have to say about the massive problems that the industry is adding to day, after day, after…

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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.

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