Copyright 2017 T3P LIMITED 1c.ymcdn.com/sites/ · AN OPTIMIST’S TOUR OF THE FUTURE ... It takes...

© 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


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.


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


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




• Embrace the exponential



EXPONENTIAL CHANGE

VS

LINEAR CHANGE


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



• Institutions that don’t innovate will die



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


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


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


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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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


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


Anticipate

Alternative Futures

HOW?

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CREDIT RISK


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


SUPPLIER RISK


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’


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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RISK - EXAMPLES

• Black Swan Events / Unknown Unknowns • Liquidity Risk • Operational Risk • Concentration Risk and Correlation Risk • Lack of Flexibility and Agility


“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


“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.


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).

T3P LIMITED Company Number: 04344371 Registered in England & Wales 24 Ellis Farm Close Woking Surrey GU22 9QN United Kingdom Email: [email protected] URL: www.t3plimited.com

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Copyright 2017 T3P LIMITED 1c.ymcdn.com/sites/ · AN OPTIMIST’S TOUR OF THE FUTURE ... It takes...

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