CEO = Ceiling of Extreme Opacity? (via insuranceguild)

Unfortunately, it is a recurring theme and this excellent blog item sums up the nature and extent of the problem.

This piece follows on (from a banking perspective) from my own, more broad based, recent blog:

Who ever thought risk was optional?

The PRESSING NEED for cultural change is apparent but I suspect we are going to have to wait until the next (imminent!) crisis…or maybe the one after that…to witness the wholesale acknowledgement that there is a difference between saying and doing the right thing.

In the meantime it’s “business as usual”

The IRM Chairman’s very interesting article on risk culture in the December 2010 Risk Professional Journal spurred me to pen this piece[i]. It has become something of a cliché in risk management to talk of ‘setting the tone from the top.’ In reality, how many organisations really practice what they preach? It is quoted that the most remarkable finding of the RiskMinds 2009 Risk Managers’ Survey was that, ‘risk professionals – on theRead More

via insuranceguild

Why (and how) the U.S. Has Launched a New Financial World War

BEIJING - OCTOBER 29:  Chinese and American na...

Image by Getty Images via @daylife

Any, reasonably well informed and right-minded person must have been wondering just what the hell has been going on with the money being pumped into the financial system and continuing to “disappear”!?

The article, from which this extract is taken can be found here. It MAY answer some pretty obvious questions…and pose plenty of new ones!

Finance is the new form of warfare – without the expense of a military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? All that is required is for central banks to accept dollar credit of depreciating international value in payment for local assets.

Victory promises to go to whatever economy’s banking system can create the most credit, using an army of computer keyboards to appropriate the world’s resources. The key is to persuade foreign central banks to accept this electronic credit.


The Author: Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire(new ed., Pluto Press, 2002) and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy. He can be reached via his website,

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Beware Self-Inflicted Complexity

Gulf of Mexico with ship

Image via Wikipedia

Here is an insightful piece from Harvard Business Review, by Ron Ashkenas, a managing partner of Robert H. Schaffer & Associates and a co-author of The GE Work-Out and The Boundaryless Organization. His latest book is Simply Effective.

If you’ve read the papers lately, it sounds like “complexity” is the explanation for many of the world’s problems. A feature story in the Sunday New York Times business section, titled “It’s Complicated,” suggested that too much complexity was behind the financial crisis, the difficulty in understanding health care reform, and the oil spill in the Gulf of Mexico. The author of the article, David Segal, summed it up this way: “Complexity used to signify progress…the riddle of some advance in technology. Now complexity lurks behind the most expensive and intractable issues of our age.”

Of course blaming complexity for various problems sounds good and may even feel good, but it doesn’t really accomplish anything unless we can do something about it. But in order to move into action, we first need to look at the difference between naturally occurring (and perhaps inevitable) complexity and complexity that is unnecessary and self-generated. With the former, the best we can do is to learn how to live with it; while the second type of complexity we can attack. Unfortunately, the two are often intertwined. And that’s where things really start to get complex.

Let’s look at the ecological disaster in the Gulf of Mexico. Many aspects of this drama are just plain complex. Trying to stop the flow of an oil gusher 5000 feet below the surface in extremely cold water is a complex engineering challenge — as was the original exploration, drilling, and construction of the oil rig in the first place. Similarly, trying to contain the oil and limit the environmental impact is also complex, involving multiple technologies, the coordination of public agencies and private sector firms, and the mobilization of huge amounts of equipment and people. This is “inevitable complexity” — the application of advanced technologies and human ingenuity to solve new problems in uncharted and unclear waters (excuse the metaphor).

What makes the Gulf situation so frustrating however is that a certain amount of unnecessary complexity may have contributed to the disaster in the first place, and since has made it harder to resolve. On the BP side it seems like operating pressures and quality assurance procedures were not properly balanced; and the accountability between BP and the operating company was unclear. From a safety perspective, the mixture of regulatory authority and industry support made it difficult to insist on compliance to disaster prevention standards. Then after the accident the confusion of responsibility between BP, the oil rig operator, and federal and local government slowed down the response and created disjointed and unclear communications.

It’s possible to argue that these complexity issues are also the inevitable result of having multiple organizations trying to work together. But that would be a cop out. If the leaders of BP and government agencies had a constant and consistent focus on clarifying accountability, sharpening regulatory authority, and making it easy to do things the right way, the Gulf spill might have been prevented. This type of complexity is self-created by the way we structure and manage our organizations. And when combined with the already-existing complexity of technology and business, disasters can occur.

Doomed magazine cover

But this isn’t just a problem for large-scale public issues. Every organization includes a mix of inevitable and preventable complexity. We have complex technologies and manufacturing procedures, multi-stream product discovery and development processes, intricate partnerships with suppliers and customers. All of these are complex. But when we amplify the complexity by adding unnecessary layers of management, confused accountability, slow and unclear decisions, garbled communications, and lack of focus, it’s our own fault. Maybe we don’t create ecological disasters, but we do create small ones in our own organizations every day.

It’s easy to bash complexity. But we need to also look in the mirror and ask ourselves whether we are adding to the complexity.

What’s your view?

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