Probability of Default Versus the Principle of Incompatibility

In circumstances characterized by high turbulence and interdependency: it is impossible to make predictions – in fact, even the current economic crisis (of planetary proportions) has not been forecast only very rough estimates can be attempted there is no such thing as precision it is impossible to isolate “cause-effect” statements as everything is linked optimization…

On the Complexity of Dynamics and the Dynamics of Complexity

When talking of derivatives and other sophisticated financial products, people often say that they are complex, that they have complex dynamics. But what does that really mean? When is dynamics complex? What does complex mean? A layman’s definition of complex is difficult to grasp, to understand, to control, to forecast. While mathematically speaking things a…

Beyond Risk Management. What Are The Alternatives?

When facing large doses of uncertainty risk model-based methods of managing uncertainty don’t work. One thing is to manage an assembly line producing, for example, computer chips, another is to run a company in a globalized, turbulent, chaotic, non-stationary and shock-punctuated economy. Some things can be accomplished via mathematical modeling some cannot. Sure, you can…

Is It Possible To Make Predictions?

Prediction of the future has always been man’s dream. However, there is an overwhelming amount of physical evidence that this is quite impossible. This is because the future is permanently under construction. Therefore, as every second passes, the future is changed. The cause of this are the laws of physics. If the future were predictable…