Regulators v Barbarian hordes


As a franchise  Alien v Predator has obvious appeal. Unlike our title it actually sounds like a fair fight. One worth watching!

But pin-striped Barbarians atop elephants at the gates of Basel, London and Washington. How could you tell the combatants apart in hand-to-hand clashes? Well apart from the conspicuous mode of transport lack of conscience and the sharp suits. But Holly wood blockbuster? I think not…Art of War “yes”, FSA Handbook “no chance”.

Rome 

Image by Trois Têtes (TT) via Flickr

In his excellent article in this weeks Financial Times, (Barbarians at the gates of complexity) Prof John Kay, succinctly and effectively makes the point that the lessons from history are there to be learnt.

THERE IS A CONSIDERABLE BODY OF QUALITATIVE EVIDENCE TO SUGGEST THAT A “SYSTEM” CAN SUPPORT A FINITE AMOUNT OF COMPLEXITY. WITH SUITABLE DATA WE,  AT ONTONIX, ARE ABLE TO PROVIDE THE QUANTITATIVE VERIFICATION AND TO MEASURE BOTH CURRENT AND CRITICAL LEVELS WITHIN THAT SYSTEM…NOW THAT’S WHAT I CALL PROGRESS!

Please follow click these links for more Complexity Facts from Ontonix.

“…complexity breeds complexity, and is subject to diminishing  returns. Eventually the costs of increased complexity exceed the benefits” Prof John Kay

I would like to pose the question:

If the Barbarians of Financial Services have had the books but didn’t bother to read them what will be achieved by the introduction of more regulation?

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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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