Monday, 7 January, 2013 1 Comment
Friday, 9 September, 2011 Leave a comment
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…can, no longer, be sure of what we think we know, what do we actually know that is of any use to anyone relying upon our expertise?
No this isn’t an introduction from Donald Rumsfeld as a guest blogger but part of a serious question that, if isn’t answered correctly poses hard questions for the future of our industry.
Perhaps some explanation would help: we “know”, (well, understand) that we cannot predict the future – which could be pretty worrying for an industry whose success or failure relies upon the frequency and impact of a variety of events that haven’t yet and may never happen. But, in the absence of “special powers”, we have relied upon what we know i.e. what we can learn from the occurrence of similar events, in the past. We now have vast quantities of data, accumulated over many years by a wide variety of sources. The type of information with which Statisticians, Actuaries, Economists, Carol Vorderman can have hours and hours of fun with, aided by tried and tested techniques and the most sophisticated technology in our history.
Monday, 6 December, 2010 2 Comments
Financial or physical loss doesn’t only stem from “risk”! Risk we know a lot about. Dare I say that we understand, can quantify and influence (if not manage) risk? I would add one caveat though. Much of the accumulated data upon which probability and, therefore, rating is calculated, relates to a period which bears little resemblance to the world and civilisation as it is today…or will be in the future.
So what about the murky world of uncertainty that lies beyond risk? What do we know and what can we do to “deal with” that? Because that is what we are, increasingly, dealing with…
Today, there are fewer certainties.
Unfortunately, our habits of thought still make us look for linear trends and other simple patterns, and make us expect the future to be a recognizable version of the past. In many cases, we constrain our lives in an attempt to achieve such security, but in complex networks of competing businesses, in financial markets, in the world of emerging technology, and in politics, these expectations are out of place.
Organizations need to learn to distinguish between the kinds of problems that can be handled with traditional perspectives, where precise prediction and solution is possible, and the kinds of problems associated with unavoidable complexity.
Entrainment of thinking is an ever-present danger.