Innovation:: managing complexity & reducing risk [Design News]

I was first aware of the author courtesy of this quote…that alarmingly few business ‘leaders’ appear to, either, believe or understand…

“In a complex system, learning how all the pieces—constant and variable—interact gives a depth of understanding that averts catastrophe. That is what we mean by human-centred design—understanding the interfaces among technology, people, communities, governments, and nature. This is what makes complexity manageable”.

If you are in the business of making money based upon the ability of another party to avoid financial loss, then your own ability to identify the properties that distinguish ‘good risk from bad’ is, SURELY, fundamental!? So the message that there is a means to gain “…understanding that averts catastrophe“, through “understanding the interfaces among technology, people, communities, governments, and nature” must surely be greeted with wide-eyed enthusiasm. Read more of this post

[Ontonix] Coping With Turbulence: More Theories and Math?

…math is often used to model things that cannot be modeled (in the sense that the results such models produce are mathematically correct but totally irrelevant). Risk, and especially the consequences of risk, are something that math is unable to embrace. This is because risk lacks a definition, a metric (standard deviation is NOT a measure of risk) and, most importantly, because it is a reflection of subjective human sentiments as to the potential level of regret after some hazardous circumstance has actually materialized. Now how do you measure that?

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Both Aleatory and Epistemic Uncertainty Create Risk

Nice work Glen! I have asked the question before but “at what point does the decision NOT to obtain accessible knowledge about ‘reducible exposures’ [epistemic uncertainty] – such as excessive complexity – become a Corporate Governance issue?”

Epistemic risk is modeled by defining the probability that the risk will occur, the time frame in which that probability is active, and the probability of an impact or consequence from the risk when it does occur…

…For these types of risks we can have an explicit or an implicit risk handling plan. I use the word handling with special purpose. We handle risks in a variety of ways. Mitigation is one of those ways. But the risk handling work is actual work. It is in the schedule. We are doing work to mitigate the risk. We are buying down the risk, or we are retiring the risk. In all cases, we are spending money, and consuming time to reduce the probability that the risk will occur. Or we could be spending money and consuming time to reduce the impact of the risk when it does occur. In both cases we are taking action to address the risk.

via Herding Cats: Both Aleatory and Epistemic Uncertainty Create Risk.

Competitive advantage from new insights on customers, risks and business cycles – Bain & Co.

It isn’t rocket science to figure that, if we keep asking the same questions, using the same metrics and look for familiar patterns in data we won’t get new, better answers or identify new patterns!

Identifying, mapping, monitoring and managing causal relationships is a means by which carriers of financial/insurance risk can seize a considerable competitive advantage…from an informational advantage.

Ontonix enables organisations [insurers] to do just that…in real-time, if required!

So, instead of relying upon attempts to predict the unpredictable and reflexive, post-loss, analysis the opportunity exists for ‘crisis anticipation’. Our experience of working across a wide range of sectors – from healthcare to aviation, automotive and engineering design to banking – is that, our unique analysis can enable effective loss prevention. A, potentially, transformational development for firms involved in insurance risk transfer, investing for future returns or protecting against unknown (or unknowable) future events…so where are the ‘Risk Leaders’? Read more of this post

Complexity underpins the top business continuity issues for 2013

The failings &/or shortcomings of conventional risk management are known but still it’s acolytes continue to peddle their wares and ignore the inconvenient truth…

Complexity is a recognised source of risk that their tools and techniques CANNOT identify or address…but, if the understanding of the issues is growing amongst Risk Managers, surely, it can only be a matter of time before the ‘power’ of Ontonix tools becomes fully appreciated.

“…the risks we all face as we go into 2013 are much more complex, and thus much more difficult to counter,” says Michael Davies, CEO of ContinuitySA, Africa’s leading provider of business continuity services.

In what has become an annual exercise, Davies and members of his executive team met late in 2012 to review their predictions for the year and ponder what the coming year might hold for risk managers.

“What became very clear is it has become almost impossible to consider individual risks without taking the overall risk into consideration,” Davies observes. “Globalisation and the profound connectedness between individuals, companies and countries promoted by technology means that risk, too, must be seen broadly.”

Bearing this observation in mind, Davies and the ContinuitySA team have identified the following set of six interrelated risks for 2013….

Complexity underpins the top business continuity issues for 2013 | ITWeb.