If “Risk Leaders” don’t know…how can their bankers and insurers?


Here is the latest video offering from Ontonix, I trust that you will find it informative!

From a personal perspective communicating, to a prospective client or interested party, what “Quantitative Complexity Management” is about is a complex task in itself and I sincerely hope that this video explains the process, the valuable (previously hidden) information that can be obtained and how a business can derive enormous benefit from such insight.

The case study is an interesting and, in the current climate, a relatively unusual one. It is a successful, growing, business with a management team who, despite their obvious success, appreciate that there is more to learn about the business, They are prepared to be proactive and to seek out sources of risk. They are the type of RISK LEADERS who appreciate that ERM, Legal, Regulatory compliance can count for little if the underlying structure of the business is fragile. They are ensuring that the business is “fit for randomness”. That they are robust. To a bank or an insurer they represent an excellent risk:

financial – credit – management liability (D&O) – property – casualty

THE BURNING QUESTION REMAINS, IF INSIGHT INTO THE GENERAL HEALTH OF AN ORGANISATION CAN BE GLEANED BY ANALYSIS OF FINANCIAL INFORMATION (GENERATED BY THE DAY-TO-DAY ACTIVITIES OF A BUSINESS) WHY WOULD A BANK OR INSURER CONTENT THEMSELVES WITH RISK RATING BASED UPON INCOMPLETE & HISTORICAL STATISTICAL DATA?

“Running a company based on just the financials is like driving a car by only looking at the rear view mirror!”

With Ontospace we are able to map internal operational interdependencies and effectiveness as well as external supply chain robustness. We can provide the same in depth analysis and, if required, real-time monitoring of critical operations or processes.

COMPLEXITY is not an imaginary foe dreamt up just to make life more difficult than it already is for modern business. It is the inevitable consequence of the advancements we have made. We view a business as the dynamic (non-linear) complex “system” that it is and needs to be.

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“Physics Envy…” presentation by Prof Andrew Lo: Risk & Uncertainty (in financial systems)


In this entertaining presentation, Andrew Lo poses some very interesting questions and adds further fuel to the argument that a rigorous scientific approach may yet help us undo some of the ills created by man’s feeble attempts to cheat nature – dare I say, man-made complexity!?

Andrew Smithers (Smithers & Co) has drawn his conclusion – below – It wasn’t rotten maths, it was rotten epistemology. But, I’m sure he won’t be offended if I draw and justify my own conclusions as well as adding some further thoughts from Andrew Lo which would appear to support my own position. In fairness to Mr Smithers his commentary is upon the presentation. My own thoughts are more focused on the robustness [RESILIENCE] of the SYSTEM rather than that of individual companies, portfolios or strategies. I am no expert. More of an enthusiastic amateur whose personal pursuit of a means to develop financial products that delivered TRANSPARENCY, SUSTAINABILITY and CUSTOMER VALUE led me to the realisation I would be better equipped for “the journey” armed with an understanding of COMPLEXITY…something that Einstein spoke so passionately about (below). Hence my involvement with Ontonix.

I have also included, below, a link to a superb article from Fund Strategy magazine, “Back to Nature”. In it Andy Haldane (Director of Bank of England), Lo and others recognise that there is much more for economists…all of us…to learn from the study of biological systems.

If you are involved at all in investment, insurance, credit or risk management and have aspirations that you may continue to be so, then you had better make sure you get your head round this message and ensure that your boss (and their boss) understand it…or, at least, give it some thought!

If an eminent Economist and a Physicist, both with in depth knowledge of the financial markets, are warning of the dangers of making key business decisions without a thorough and inter-disciplinary (see below) approach, business leaders need to listen if some businesses – industries – are to have a future.

Will anyone be so bold as to model that!!?

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