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    Economic downturn crisis forecast November 2008

    Contact us to know details on economic downturn crisis forecast

    graphic results of economic downturn crisis forecast November 2008

    Economic Downturn Magnitude and Duration Quantitative Study by Riskope (http://www.riskope.com), November 2008

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Our judgements are clouded by prejudices and misconceptions.

We humans often assess the probability of an event by asking ourselves if there are “cognitively available” examples, (i.e. readily available through memory) as Kahneman (Nobel Prize in Economics) and Tversky demonstrated in a series of papers published between 1971 and 1984, among which the most popular is likely the one entitled “Prospect Theory”.(1979 quoted at page 212 in our book)

The phenomenon highlighted by Kahneman and Tversky is called “availability heuristic” and is one of the very well know cognitive biases that plague us Humans when we are confronted with decisions under uncertainty.

That’s most likely why the 2008 recession was considered unheard of, a Black Swan: just because most people did not remember (were not even born) in 1929! The Black Swan “fad”, as we have demonstrated in earlier blog posts is indeed based on Humans having “short memory” and considering the last events as “unique”.

Sometimes we are forced to use availability heuristics because available data are indeed very scarce and only recently gathered, but reliable statistical evidence will systematically outperform “intuition” when “looking backwards” in time to past events to draw conclusions.

Looking backwards, however, is not enough, actually it is critically limiting and incomplete, when we are confronted with managing risks of corporations and projects. A good risk assessment has to be “looking forward”, examining “classic” scenarios and hypothetical ones, that have not yet occurred, or not yet occurred with larger magnitudes, to make management decisions.

Over the last five decades or so the risk management community has settled on representing the results of Risk Assessments with Probability Impact Graphs (PIGs), risk matrices, “Heat Maps”, which have a number of staggering intrinsic conceptual errors, with potential dramatic consequences on their users. Voices raise in various parts of the world to discuss these fallacies, but they remain for the great par unheard.

The continued “main stream” reliance in using inappropriate techniques like PIGs, and being satisfied of their results, or, using intuition to correct PIGs’ evident fallacies, is simply another manifestation of Kahneman and Tversky explored ways we, Humans, have found to introduce irrelevant criteria in decision-making.

As a matter of fact Kahneman and Tversky have explored in detail how human judgement can be distorted when making decisions under uncertainty: humans tend to be risk-averse when facing the prospect of a gain, and paradoxically risk-prone when facing the prospect of a loss (even if the loss is almost certain to occur)! So, using improper methods like PIGs which almost surely will lead to confusion, losses, poor planning sits well with “main stream” human nature.

So, “now that we know that we do not know how to know better”, the whole idea of building a rational prioritization on top of existing PIGs, as they stand in most industries, or after enhancing them, comes out as a clear winner: by deploying rational prioritization we give a rest to our scientifically proven fallacious intuition, allowing our rational ego to make better informed solutions! Do not be “main stream”: belong to the small elite that adheres t stricter cognitive standards and make you industry thrive and prosper.

We will soon publish a post explaining how you can do that.

Systemic Organizational Constellations (SOC) Strengthen Your Organization/Project From Within

Riskope has teamed up with an international expert in the systemic organizations’ approach and offers a new format of educational seminars aiming at making you and your organization/project reach new highs toward organizing a serene, well-balanced, sustainable and profitable future.

What about your team being able to simultaneously acquire the basis for a rational and scientific approach to risk prioritization and management, while becoming aware of any systemic obstacles that would render implementation difficult, how to solve them and develop new dynamics within the organization.

Riskope can indeed strengthen your organization/project from within through a new kind of seminar.

As a man/woman of great experience you know from history, compelling studies (Harvard School of Business, etc.) and recent events (stock market, financial crashes, BP gulf oil spill, various political debacles) that lack of preparation in terms of risk and crisis management can lead to critical, sometimes intolerable situations. Those events and studies have also shown that prepared organizations survive more successfully and maintain leadership and control.

Being prepared means having a clear(er) idea of your risk priorities, having in place the right impact prevention and reduction plans. Prioritization based on sound scientific basis and the resulting robust planning costs a fraction of the insurance premiums you pay year after year without blinking an eye, and certainly less than biased, intuitive prioritization, based on approximate concepts that we encounter by clients entrusting their future in commercial software, or following advice from “past oriented specialists”.

However, the path to rational, prioritized risk and crisis management is often complicated, precisely “from within”, by systemic obstacles, by somewhat erroneous perceptions of the complexity of the endeavor, or any of the recognized biases (19 social, 8 memory, 42 decisions making and 36 probability/belief).

Your team will be able to simultaneously acquire the basis for a rational and scientific approach to risk prioritization and management, while becoming aware of any systemic obstacles that would render implementation difficult, how to solve them, develop new dynamics within the organization. Look at the course brochure.

Strategy, Leadership and Success in Personal and Organizational Development

2012 marks the 20th anniversary of Riskope’s active service in the international Risk and Crisis Management arena.

Although we exist, in one form or another, since 1988, our companies drastically evolved from Engineering to Risk and Crisis Management with the acquisition of a series of very unusual jobs in the early 90s.

Risks Assessments

Risks Assessments Evolution Clientele

It appears now that those jobs were the tipping point of our evolution, as summarized by the following images.

Risk asessment solved problems

Risk Assessments Solutions

Quantified “Catastrophic Scenario” in Risk Assessments

quantified “catastrophic scenario” in risk assessments

Riskope has been blessed over the decades with a number of incredible opportunities to develop ground breaking techniques, mostly because of the exceptional foresight and acuity of our clients.

It has been for us a source of pride and delight to see the recent paper (Canadian Insurance, Risk Manager, Winter 2011, pages 8-12) devoted to Anne Chalmers, V-P, Risk & Security, Chair, Materials Stewardship Committee, Teck, client of ours since 1999. Anne’s impressive achievements are described through interviews of corporate key stakeholder and insurers, including the note saying that Anne “was made vice-president in 2009, and is notably the first risk manager within Teck to ever hold an executive title”.

Although most of Riskope’s consulting work is covered by confidentiality and in some case military or governmental secrecy, the written comments reported below, coming from highly ranked officers of international corporations, organizations, national ministries (including military) give us a strong signal for continuing in our path of innovation and good risk engineering:

Thank you for your endless help! (long time consulting/coaching client).

Not only was the course highly informative and pertinent to a multitude of scenarios across a wide variety of industries, it was also extremely interesting – a factor often missing from other professional development training seminars I have attended in the past. (a course participant from the printing/media industry).
Irrefutable results…delivered on time, on budget (client for a nation wide cyberwarfare risk approach).
Now I can see! (course participant).
Thank you again for the formidable, enriching job you did. I look forward to working again with you and learn more. (first time consulting client).
Working with Franco and Cesar has begun to bring clarity to an area where there is much doubt. The Oboni perspective is often unexpected, usually enlightening and certainly challenges preconceptions. (UNDP expert in unexploded ordnance).
2010 ICCC Business Innovation Award

In addition to our website and blog, where we strive to deliver for free “the latest on the subject” to interested readers, our courses and seminars, which can be organized in-house, web-based, or web-casted, are an excellent way to understand the benefits that you can reap from solid, no non-sense, risk prioritization.

In this 20th year of development and innovation, we will announce a series of new development programs and international cooperation that will change, once again, the way our clients see their world, their environment, empowering them with new Strategies, enhancing their Leadership and generating Success in their Personal and Organizational Development.

Stay tuned, register (for free, of course) to our blog, contact us!

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