Risk:: some things just CANNOT be modelled


Believe it or not this is only an extract from a longer article by the Founder of Ontonix. I am, very much a layman when it comes to computer models but that is most certainly not the case with Jacek (Marczyk). However, even I know enough to question, what I have come to refer to as, the “prediction addiction”  that afflicts the insurance and wider financial sector.

There is a fundamental principle – the Principle of Incompatibility – which states that as complexity increases, precision and relevance become mutually exclusive. In other words, as things get complex (and they seem to be) your statements about it become less and less precise. This means that as something becomes highly complex you can forget building models. You need to change strategy. A new approach is needed. You must change direction. Large consulting firms claim otherwise. Read more of this post

Airmic:: ‘Black Swan’ events – avoiding extinction


Practical advice, courtesy of AIRMIC & Marsh. The article is well worth a read even though all it really does is reiterate some of the key points I have been putting across since I started my original blog in 2009!

I have selected this extract as it identifies a huge failing that “stalks” the whole financial and risk sector but about which too few are prepared (or able) to be honest and many are even less forthcoming about its impact: ASSUMPTION.

The truth is that, without a healthy dose of assumption, the basis for flawed economic theory, mathematics that is as misleading as it is elegant and the computing power to turn it all into plausible financial models, they would not find it so, relatively, straightforward to relieve the populous (directly or indirectly) of our hard earned cash to enable them to wield – and abuse – the power that it brings!

Read more of this post

Risk Management:: we have one history but multiple futures – can we “fix” it?


OK, so, in Economics and Finance we hear a great deal about “models”. Despite the obvious and much written about, failings, great store is put in their accuracy and ability to predict…even though, we already KNOW that, meaningful prediction about future events, based upon past events and outcomes, IS NOT POSSIBLE! 

We are [still] in crisis and surrounded by increased volatility, uncertainty, complexity and ambiguity: most of it of our own making.  The need for CHANGE, to give us hope worth clinging to, is even more pressing. But…

…we can’t begin to rebuild trust, an industry or economies without reliable tools:

Financial and Political mismanagement, misinformation, manipulation and mis-selling brought us to this point and mere rhetoric about “change” cannot mask these facts!

TRUST needs a foundation: the failure of past models, techniques and tools tell us that, without TRANSPARENCY, we need evidence from those that claim the ability and desire to (re)build a RESILIENT and SUSTAINABLE future.

One in which the integrity of the entire “structure” is ROBUST from the bottom up, or inside out [i2o].

Risk: Things that Cannot be Modelled Should not be Modelled


Ludwig Wittgenstein sustained that “what cannot be debated should not be debated”.

Ontonix say that what cannot be modelled should not be modelled. Otherwise one faces making massive investments with no tangible return. Based on our current understanding of physics and using our contemporary mathematics certain things are “impossible to model”.

Our (Ontonix) approach “flies in the face” of conventional wisdom but a host of high profile supporters are already advocating a shift of focus AWAY from risk modelling – using incomplete data to try to predict the future.

Ontonix are the first company to offer a model free means of Quantitative complexity analysis and management.