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Correlation is Charlatanism.

“…correlation is charlatanism” Photo: AP photo/Richard Drew “Anything that relies on correlation is charlatanism” is a great article. But is correlation charlatanism? Yes it is. But it is not for the reasons explained in the article. Here is why. Correlations are present everywhere. The concept of correlation is one of the key constructs of statistics,…

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The Elegance of Frugality and Risk

Preface to “A New Theory of Risk and Rating” by Giulio Sapelli. The Elegance of Frugality and Risk. From a theoretical standpoint, risk is confronted in the very same way in which human interests and activities deploy and manifest themselves at given levels of self-organization. In fact, there cannot exist an objectivistic and deterministic theory…

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Large-scale Analysis of Ecosystems of Corporations

In an interconnected and complex economy corporations form networks, or ecosystems. In the case of banks, telcos or insurance companies these ecosystems can be huge as they may contain millions of clients. Moreover, such ecosystems are changing constantly as companies compete, cooperate and default while new companies are being formed. Rapid change and complexity of…

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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…