copyright 2017 t3p limited 1c.ymcdn.com/sites/ · an optimist’s tour of the future ... it takes...
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© Copyright 2017 T3P LIMITED
“Essentially, all models are wrong, but some are useful.”
George Edward Pelham Box (1919.10.18–2013.03.28) was a British mathematician and Professor of Statistics at the University of Wisconsin. He was a pioneer in the areas of quality control, time series analysis, design of experiments and Bayesian inference.
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There is a naïve belief that mathematical models can foretell future risks… …but they ignore ‘outliers’, include too few variables and use simplified assumptions
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‘If it seems too good to be true, then it probably is, too good to be true’ used to be the old mantra. Now, something too good to be true is often mistakenly assumed to be the result of a super-intelligent, complex quant analyses. Despite all the complexities, shouldn’t sound human judgement have said something about AIGFP raking in so much money that they didn’t know what to do with it?
MANAGING EXTREME FINANCIAL RISK BY KARAMJEET PAUL
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RISK MANAGEMENT IS ABOUT
MANAGING THE FUTURE
Assessing and managing the risk of: • not being paid in the future for
goods delivered, or • not being compensated for
transactions repudiated in the future.
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THE FUTURE DOES NOT EXIST
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Only the Present Exists One moment at a time
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CHANGE HAS CHANGED
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LEADING THE REVOLUTION © 2000 GARY HAMEL
No longer is it additive.
No longer does it move in a straight line.
In the twenty-first century, change is discontinuous, abrupt, seditious.
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Acknowledging Change
“The world is transforming around you. The truth is, the thing(s) you did to get (where you are) will no longer work to keep you there.” This is something they call ‘The Big Shift’ which is already affecting every aspect of society
MARK STEVENSON: AN OPTIMIST’S TOUR OF THE FUTURE 11
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Mark Stevenson’s New Philosophy
• Embrace the exponential • Adopt a questing disposition • Measure my value by what I create,
not what I own • Evolution isn’t over • Institutions that don’t innovate will die
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Mark Stevenson’s New Philosophy
• Embrace the exponential
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EXPONENTIAL CHANGE
VS
LINEAR CHANGE
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The Speed & Quantum of Change “If you look at progress in genome sequencing for example — itself an interplay of infotech, nanotech and biotech — it’s outstripping Moore’s Law* by a factor of four.
(Therefore) What I think is more important to pay attention to is how all these disciplines are blurring together sometimes creating hyper-exponential growth.”
MARK STEVENSON: INTERVIEW BY R U SIRIUS IN JULY 2011 *The number of transistors in an integrated circuit doubles +/- every two years
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The Speed & Quantum of Change
‘… interplay of infotech, nanotech and biotech…’ ‘… how all these disciplines are blurring together sometimes creating hyper-exponential growth.’
MARK STEVENSON: INTERVIEW BY R U SIRIUS IN JULY 2011 16
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Mark Stevenson’s New Philosophy
• Institutions that don’t innovate will die
MARK STEVENSON: AN OPTIMIST’S TOUR OF THE FUTURE 17
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NADYA ZHEXEMBAYEVA IN HER TED TALK TITLED TO HOLD ON, LET GO, IN APRIL 2015 - VIEW THE TALK AT:
https://youtu.be/f4kySpcdvFg
To Hold On, Let Go Forget ‘built to last’. Build to reinvent
“The business you are in today (will) not be the business you’ll be in three and a half years from now.”
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“We must remake who we are, what we offer, and how we deliver our offerings to the world. Take the essence of what you are, and let go of everything else.”
NADYA ZHEXEMBAYEVA
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THE DEMANDS OF CHANGE
“… (in) running the business, old processes were focussed on.
We needed new processes that were focussed on changing the business.” Vineet Nayar CEO of HCL Technologies.
GARY HAMEL: WHAT MATTERS NOW - HOW TO WIN IN A WORLD OF RELENTLESS CHANGE, FEROCIOUS
COMPETITION AND UNSTOPPABLE INNOVATION 19
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IGNORED EXTERNAL CHANGE
“In the face of rapid change and globalisation, data driven risk management methods alone are no longer adequate.”
RON WELLS: THE CHAMELEON IN THE ROOM EMBRACE BUSINESS RISK – ENSURE SURVIVAL & GROWTH 20
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UNKNOWN UNKNOWNS
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UNQUANTIFIABLE UNCERTAINTY
Risk from unquantifiable uncertainty cannot be modelled, therefore cannot
be covered by traditional risk management practices or insurance.
THE CHAMELEON IN THE ROOM BY RON WELLS
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UNQUANTIFIABLE UNCERTAINTY
Risk from unquantifiable uncertainty cannot be modelled, therefore cannot be covered by revenues generated.
MANAGING EXTREME FINANCIAL RISK BY KARAMJEET PAUL
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It takes Courage to take a Risk – Not Numbers
LIFE'S A PITCH BY STEPHEN BAYLEY & ROGER MAVITY
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If you can’t hide behind numbers, how can you find the courage to make a decision?
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How do you defend your decisions?
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Anticipate
Alternative Futures
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Only the Present Exists One moment at a time
THE FUTURE Past Decisions Constrained
Brave Decisions Shaped Major Impact Events Jolted Embraces a New Present
One Moment at a Time
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THE FUTURE
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Past Decisions laid the Foundation
Brave Decisions taken by 7 billion people interacting with
Nature and
Major Impact Events shape
The Future
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Anticipate
Alternative Futures
HOW?
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CREDIT RISK
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MEANS, MOTIVE AND OPPORTUNITY TO PAY = M2O
The means to pay when the invoice is due
The motivation to pay when the invoice is due
The opportunity to pay when the invoice is due
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SUPPLIER RISK
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OPPORTUNITY, MOTIVE & MEANS TO PERFORM
Opportunity: Sufficiently hedged to tolerate any
Potential Future Exposure
Motive: Motivated to meet its commitments
Means: The financial means to pay ‘performance
failure compensation’
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UNQUANTIFIABLE UNCERTAINTY RISK
Risk from unquantifiable uncertainty cannot be modelled, therefore cannot be covered by traditional risk management practices or insurance.
THE CHAMELEON IN THE ROOM BY RON WELLS
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UNQUANTIFIABLE UNCERTAINTY
RISK - EXAMPLES
• Black Swan Events / Unknown Unknowns • Liquidity Risk • Operational Risk • Concentration Risk and Correlation Risk • Lack of Flexibility and Agility
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“The future is already here — it's just not very evenly distributed.” William Gibson - 1993
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“Scenarios are learning stories ... the process of working through them
(and) experiencing them, is as important as the conclusions.”
Quotation from Russia 2010 and what it means for the World by Daniel Yergin & Thane Gustafson © 1993, 1995 Cambridge Energy Research Associates.
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MORE INFORMATION IS AVAILABLE ON Barrettwells.co.uk see webpage: http://www.barrettwells.co.uk/credit_2010.html#SCENARIO%20PLANNING
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“You can’t outrun the Future if you don’t see it coming.”
GARY HAMEL: WHAT MATTERS NOW - HOW TO WIN IN A WORLD OF RELENTLESS
CHANGE, FEROCIOUS COMPETITION AND UNSTOPPABLE INNOVATION
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THE CHAMELEON IN THE ROOM
ISBN-13: 978-0-9576279-4-9
This book presents alternative ways to cope with the diabolical array of risks that threaten non-financial businesses; including some seldom written about to date; e.g. Black Swan Events. Look inside using this link: http://www.book2look.de/book/XDU8RVItrX
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In the face of rapid change and globalisation, data driven risk management methods alone are no longer adequate.
© Copyright 2017 T3P LIMITED
Disclaimer:
The information provided in this document and the associated live presentation has been derived from sources believed to be accurate and reliable. Such information is provided "as is" without warranty of any kind and T3P LIMITED and/or its Associate(s) make no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of the information. Under no circumstances do T3P LIMITED and/or its Associate(s) have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error or other circumstance or contingency within or outside the control of T3P LIMITED and/or its Associate(s) in connection with the procurement, collection, compilation, analysis, interpretation, editing, transcription, transmission, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory, or incidental damages whatsoever (including without limitation, lost profits).
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