Insurance: working with or against nature

Image via Wikipedia

“Organic growth” is a phrase widely used…particularly by people who tend to demonstrate that they have little understanding of its meaning!

Sustainable growth of any crop is dependent upon a multitude of factors, not least of all, the environment. Regional climates are such that a skilled practitioner can plant, cultivate and harvest according to the natural growth cycle. They, literally, cannot uproot and carry on elsewhere in the event that circumstances outwith their control blight their harvest.

Thankfully the insurance industry does not suffer like this! But there are similarities…some that are “overlooked” by leaders because they conflict their hopeful forecasts!    

We are bound by cycles, annual or longer. Bad seeds will not flourish, no matter how good the ground and they can deprive healthy seeds of the care and nourishment required to nurture healthy crops. In some instances diversification or acquisition of more mature plants may shorten a cycle but at what price?: initial cost and demand upon additional resource. Unless we are suitably prepared, our livelihoods can still suffer as a result of sudden or unforeseen changes in the local, regional or global (economic) climate; new market entrants; supply/demand or logistics issues. If demand isn’t increasing, banking on scarcity to bring about a price rise is a risky strategy.

Our crops may not fail but dependence upon “yields”, that are subject to factors outwith our control – simply because the post-war economic climate has been relatively benign – is a dangerous assumption. The long range weather forecast makes for a pretty bleak outlook and risky strategies appear to be very fragile.

But this is a harsh commercial world! For farmers, for insurance and every industry. Business leaders ought to learn lessons from nature.

Pursuit of unsustainable returns to cover increased overheads (and funding debt) can lead to poor seed or crop selection and over-farming: more artificial nutrients (perhaps genetically modified); more labour intensive. The excessive demand upon finite resources – in particular human resources – will have a negative impact upon morale and product quality.  Growth, “yes”, organic, “no”!

Isn’t it ironic that farming is referred to as “honest work”!?

“Disaster myopia”: Failing to learn the lessons of increased uncertainty

From Andy Haldane at Bank of England in ft.com:

People tend to forget events that happened a long time ago and give much less weight to the probability that these will happen again. This “disaster myopia” led to models that hid the true probability of some disasters. A further look back into history would have shown fluctuations in UK GDP four times greater than that of the past 10 years, that of unemployment five times greater, that of inflation seven times greater and that of earnings 12 times greater.

The following is an extract from (with link to) my original article

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 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 … Read More

via Get “fit for randomness” [with Ontonix UK]

Socio-Political complexity…naturally!

POLITICAL structures evolve in much the same way as biological species, according to new research. And just as species can decline and vanish without warning, unstable political groupings can also degrade and disappear.

The similarities between animal evolution and political evolution are revealed in research published last week in the journal Nature. The international research team from Japan, the UK and New Zealand [led by Thomas Currie of the University of Tokyo], showed how it could build “family trees” for emerging political structures to map out their evolutionary development.

The thing that most startled the researchers was the fact that “cultural evolution” could be mapped on to a family tree.

“This study highlights the benefits of applying the same kinds of techniques used to study complex systems in nature to investigate long-term human social and cultural evolution,” the authors write.

“Interestingly, these results indicate that political evolution, like biological evolution, tends to proceed through small steps rather than through major jumps in ‘design space’,” they say.

The price of complexity…

They also found, however, that retrograde steps do not have to progress on this “sequential” basis and can come apart more quickly than they are assembled over time.

“This could occur if small, peripheral groups break away from the control of a centralised state or complex chiefdom, or found new societies with fewer levels of political organisation, or it could occur as part of a rapid, more widespread societal collapse and the breakdown of political institutions leaving smaller, less politically complex groups in some regions.”

 

Related articles

• Complexity: it’s complex(!), real, multi-layered and VERY dangerous (fitforrandomness.wordpress.com)
• Complex Systems and Ecology: Report by US National Academies/NRC & Fed. Reserve Bank of NY (davidgwilson.spaces.live.com)
• Politics by proxy (economist.com)

Nature always extracts justice

This article (A Needed Antidote to the Worst of Commodity Culture) conjures up both beautiful and terrifying images. The sheer folly of our abuse of the environment MUST resonate with those whose obsession has been personal wealth and power. I was reminded of the book by Joseph Tainter “The Collapse of Complex Societies”…change has gotta come:

Defy nature and it obliterates the human species. The more we divorce ourselves from nature, the more we permit the natural world to be exploited and polluted by corporations for profit, the more estranged we become from the essence of life. Corporate systems, which grow our food and ship it across country in trucks, which drill deep into the ocean to extract diminishing fossil fuels and send container ships to bring us piles of electronics and cloths from China, have created fragile, unsustainable man-made infrastructures that will collapse.

Corporations have, at the same time, destroyed sustainable local communities. We do not know how to grow our own food. We do not know how to make our own clothes. We are helpless appendages of the corporate state. We are fooled by virtual mirages into mistaking the busy, corporate hives of human activity and the salacious images and gossip that clog our minds as real. The natural world, the real world, on which our life depends, is walled off from view as it is systematically slaughtered. The oil gushing into the Gulf of Mexico is one assault. There are thousands more, including the coal-burning power plants dumping gases into our atmosphere that are largely unseen. Left unchecked, this arrogant defiance of nature will kill us.

“We have reached a point at which we must either consciously desire and choose and determine the future of the Earth or submit to such an involvement in our destructiveness that the Earth, and ourselves with it, must certainly be destroyed,” writer-poet Wendell Barry warns. “And we have come to this at a time when it is hard, if not impossible, to foresee a future that is not terrifying.”

Chris Hedges, a Pulitzer Prize-winning reporter, is a senior fellow at the Nation Institute. He writes a regular column for TruthDig every Monday. His latest book is Empire of Illusion: The End of Literacy and the Triumph of Spectacle.

Related articles by Zemanta

• Complexity: Clay Shirky draws attention to this major threat… (davidgwilson.spaces.live.com)
• The Enigma of Capital and the Crises of Capitalism (davidgwilson.spaces.live.com)
• Nassim Taleb on the impact of debt in uncertain times and lessons from nature (davidgwilson.spaces.live.com)
• CEO’s recognising BENEFITS of sustainability (davidgwilson.spaces.live.com)