by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
“Human lives are not pieces of string that can be separated out from a knot of others and laid out straight. Families are webs. Impossible to touch one part of it without setting the rest vibrating. Impossible to understand one part without having a sense of the whole.[1]
The above is a quote from the novel “The Thirteenth Tale”. In my opinion a fascinating story that is extremely well written. In this blog I do not want to expound any more on the book (although I will encourage everyone to read it), but instead I would like to focus on the passage written above. This passage seems to be a perfectly obvious statement. We all know how relationships can be, and more so how family relationships can be. I think everyone can relate to the above passage in one way or another.
An additional moment’s thought however and one can also realize that the above passage applies to companies. Companies – like families – are webs. Furthermore it is impossible to understand one part of a company without having a sense of the whole.
But take an additional moment to ponder whether or not industries – like families – are webs, and the answer will almost assuredly come back “yes”. Going a little further down the wormhole we can ask ourselves whether or not economies are webs of industries, and then whether or not the global economy is a web of economies.
This is the basis of the science of complexity. It is a subject that I am very interested in and a subject that I believe needs to be understood and appreciated for a new and more powerful paradigm in risk management (and indeed in business as a whole) to come about. With all due respect and apologies to Diane Setterfield;
Risk issues are not pieces of string that can be separated out from a knot of other corporate issues and laid out straight. Corporations are webs. Impossible to touch one part of it (i.e. risk) without setting the rest of the issues vibrating.
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