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The merger of Inability to distill, Not invented here, and Competitive bad advice


Continuing from part 1, When clients for risk assessment/risk pricing take on a risk of their own:

The merger of Inability to distill, Not invented here, and Competitive bad advice give rise to a persistent condition we see among many that are party to risk assessment or risk pricing: Deming's "They don't know that they don't know." Furthermore, there is little time to teach them, especially without causing embarrassment to one party or another.

Under Inability to distill, I had noted that they "can't analyze what they have," and so lapse into the condition of being "better informed without the ability to act." This is the crux of the operable decision problem, i.e., they do not "see" the data in first instance, do not see context, do not see relevance, do not see pattern at any time, and do not see patterns maturing over time. They are deprived of a meaningful means of prediction.

In such cases, we offer counterintuitive data and interpretation with the means to reinforce them. This process goes so far that some of our analysis reports have a 'front half' designed to educate and teach, to bring contextual relevance, in order to make the conclusions digestible to one or more managerial or operational levels within the client's organization.

An excellent example is the presumed unpredictability of the form of violence the popular press calls ethnic strife. Too many analysts overlook it, presuming it random. I also see an element of condescension at play as this form or violence is often seen in third world areas so that there is an unspoken dismissal of "unskilled natives." While those "natives" may lack technology, they are keen observers of their environment and exercise effective political control over their patch within the technical or military means at their disposal. (Genocide does not require organized rail transportation and gas chambers. It can be easily accomplished with pangas, machetes, and gasoline.)

Properly known as "intrastate communitarian strife," ethnic strife is sufficiently regular that an Indications & Warning (I&W) function containing a formal logic of escalation can be built around it that will indicate likely next steps.

News items that once had no grounding can be viewed through a structural lens:

  • Countries dependent on the export of primary, or unprocessed, commodities such as minerals or coffee are more prone to civil wars.
  • A country where such exports account for 28 percent of GDP has four times the risk of civil war as a country with no such exports.
  • Countries that are divided between just a few ethnic groups are much more likely to have civil wars than ethically diverse countries.
  • Once a civil war has ended the chance that war will resume "goes up by a factor of six if there is a large and relatively wealthy population of natives living outside the country."
  • Intrastate communitarian strife has three stages:
    • A pattern of exclusion or dominance in the three areas of political, social and economic control.
    • Group mobilization, where mobilization is for the purpose of capturing power and not necessarily for redressing past injustices.
    • Addition of the element of strategic bargaining in which each side uses the tools available to it to bargain for the political space.
  • There are only two main pathways for its regulation:
    • Eliminating the differences (genocide, forced transfer, partition, and assimilation);
    • Managing the differences (hegemonic control, arbitration by third party, federalization, and power-sharing)."

I refer readers to the Berlin Wisdom Model as an intelligence analysis mindset and tool for its introduction to an approach to wisdom containing five broad areas without which I do not believe good analysis and prediction can occur:

  • A fund of general knowledge
  • Procedural knowledge
  • An understanding of the relativity of values
  • An understanding that meaning is contextual
  • Acceptance of change

To be continued in part 3

Gordon Housworth

InfoT Public  Risk Containment and Pricing Public  


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