by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
As some of you may know, I am currently working on a book about the science of complexity and the lessons it has for us in business in general, and more specifically in risk management. The book is loosely based on my RMA Journal article (available at the link on our website www.RSDsolutions.com) that was titled “It’s Not Complicated!”
One of the articles that I reference in the book is “Ecology for Bankers”, which was published in the February 21, 2008 issue of Nature by Robert May, Simon Levin, and George Sugihara. This is a wonderful article that shows some of the similarities between financial systems and ecosystems, and points out how an understanding of ecosystems can help in risk management. It is a wonderful article, and one that each and every risk manager, CEO, banker and perhaps most particularly, regulator should read.
Here is the issue. This article is in a science magazine. It is not in a business magazine (or a business research journal). Thus, given the relatively narrow focus of most in the business community it will probably be totally ignored. What a shame. The biggest systemic risk of all is that we are all so focused on having the state of the art risk management system, that we lose sight of the forest as we all examine the same piece of bark from the same tree.
