Complex Ecosystems Can Offer A Better Guide To Risk

I agree fully with Robin Wigglesworth’s description of financial markets representing complex ecosystems, connecting every human on the planet.

Unfortunately, the risk models that are currently being used to monitor financial tremors are still based on classical economics from more than 50 years ago, which assume linear systems that demonstrate equilibria, rationality and efficiency.

Like defective seat belts, they provide the illusion of safely but fail to work when they are most needed — during a crash. We need to jettison these “flat-earth” quantitative models, and instead look to biological evolution and complex ecosystems, which are built around adaptability and survivability, to gain greater insights.

Aron Miodownik
Cambrian Consulting
“Complex ecosystems can offer a better guide to risk” | Financial Times New York, NY
US Copyright | The Financial Times Limited 2018. All rights reserved.

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