{"id":213,"date":"2020-12-05T10:36:32","date_gmt":"2020-12-05T10:36:32","guid":{"rendered":"https:\/\/finstic.org.uk\/?page_id=213"},"modified":"2022-09-28T11:00:35","modified_gmt":"2022-09-28T10:00:35","slug":"finstic-members-work","status":"publish","type":"page","link":"https:\/\/finstic.org.uk\/?page_id=213","title":{"rendered":"FinSTIC members&#8217; work"},"content":{"rendered":"\n<p>This page highlights some of the work of FinSTIC members. If you have content that you feel would be relevant to highlight to members of our community then please <a href=\"SystemsThinking@actuaries.org.uk\">contact us<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Complexity challenge<\/h2>\n\n\n\n<p>Whilst not a work by a FinSTIC member, there is an interesting articly in the Actuary magazine by Lawrence Habahbeh on understanding complicated risks and systems. Please read at: <a href=\"https:\/\/www.theactuary.com\/2022\/07\/26\/complexity-challenge-understanding-complicated-risks\">Complexity challenge: understanding complicated risks | The Actuary<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is sustainability?<\/h2>\n\n\n\n<p>In November 2021, FinSTIC hosted a discussion what we mean when we talk about sustainability. <\/p>\n\n\n\n<p>There was a presentation by Nico Aspinall, followed by a short discussion with Nick Silver (both members of FinSTIC) and later with questions from other attendees.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"FinSTIC - What is sustainable\" width=\"840\" height=\"473\" src=\"https:\/\/www.youtube.com\/embed\/LY80RAtusHY?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Public interest, purpose-driven institutions and the actuary as arbiter of  the ethical process<\/h2>\n\n\n\n<p>In March 2021, Nico Aspinall, FinSTIC member presented at the Institute and Faculty of Actuaries Finance in the Public Interest webinar. His remarks from the webinar have now been collated into a paper (which can be found <a href=\"https:\/\/finstic.org.uk\/wp-content\/uploads\/2021\/07\/NicoAspinall_PublicInterest.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>). In this paper he argues that:<\/p>\n\n\n\n<ul><li>The concept of the public interest aligns well with public goods, commons and externalities to business.<\/li><li>That purpose-driven organisations treat these as external capitals they rely on rather than externalities they can ignore.<\/li><li>That actuaries should see themselves as the arbiter of the processes an organisation takes to translate its stakeholders\u2019 objectives into strategy.<\/li><li>That ethics relates to the clarity of the actions an organisation takes and its purpose.<\/li><\/ul>\n\n\n\n<p>Along the way we will need to recapture a spirit of institutional subjectivity abandoned by a \u201cmarket knows best\u201d mentality<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Redefining the purpose of the investment system: How can the investment industry drive capital to the investments needed to create a carbon-neutral society?<\/h2>\n\n\n\n<p>In December 2020, FinSTIC partnered with the <a href=\"https:\/\/hoffmanncentre.chathamhouse.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">Hoffman Centre for Sustainable Resource Economy<\/a> at Chatham House.<\/p>\n\n\n\n<p><strong>Event Abstract <\/strong><\/p>\n\n\n\n<p><em>When we invest, our monies pass through a complex chain of financial intermediaries to corporates or governments who are expected to be able to generate value over our investment timeframes. The purpose of this system is, arguably, to generate returns for investors commensurate with their risk appetites; over the long-term this should be consistent with driving capital to those entities that will thrive in a world converting to carbon-neutrality.<\/em><\/p>\n\n\n\n<p><em>But in practice, does the structure and incentives of the industry prevent this happening? This event, hosted by Chatham House&#8217;s Hoffmann Centre for Sustainable Resource Economy and FinSTIC,&nbsp;explores the current structure of the investment industry through a systems lens.<\/em><\/p>\n\n\n\n<p><em>How well does it work? Does the interaction of key participants result in financial flows being directed to long-term, carbon-neutral investments? Ultimately, what is the purpose of the investment system, and what changes in behaviours are required to achieve the necessary redirection of capital that the climate crisis urgently requires?<\/em><\/p>\n\n\n\n<p>Below is a link to the recording of the event. <\/p>\n\n\n\n<p><a href=\"https:\/\/accelerator.chathamhouse.org\/article\/redefining-the-purpose-of-the-investment-system\" target=\"_blank\" rel=\"noreferrer noopener\">Video: Redefining the Purpose of the Investment System | Hoffmann Centre for Sustainable Resource Economy (chathamhouse.org)<\/a><\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Thermodynamics, replication and ecology: what do they imply for economics?<\/strong><\/h2>\n\n\n\n<p>FinSTIC hosted a seminar in September 2020 covering Thermodynamics, replication and ecology.  A summary video of the event content is below by Nico Aspinall.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Thermodynamics, Replication and Ecology: what do they imply for economics?\" width=\"840\" height=\"473\" src=\"https:\/\/www.youtube.com\/embed\/ElOMJbrLloE?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Ecology, Anthropology and Keynes &#8220;Animal Spirits&#8221; by M Bruce Beck<\/h2>\n\n\n\n<p>A couple of months ago Nico Aspinall presented the inaugural <a href=\"https:\/\/youtu.be\/ElOMJbrLloE\" target=\"_blank\" rel=\"noreferrer noopener\">FinSTIC Seminar.<\/a> It was on \u201cThermodynamics, Replication, and Ecology\u201d, but driven by Nico\u2019s question of \u201cWhat Do They Mean for Economics?\u201d (23 September, 2020) . The merit of the present blogpost originates in the grand sweep of Nico\u2019s presentation and the contrast it provided. A sweep and contrast that have allowed me to put some of my own parallel (systems) thinking \u2014 about economics and actuarial practice \u2014 in better order.<\/p>\n\n\n\n<p><strong>Celestial Universe, Evolution, and the Climax Community<\/strong><\/p>\n\n\n\n<p>To go from the celestial universe to molecular biology and the code of life is really quite something. If, when such a grand sweep is driven by the second law of thermodynamics, in the interests of advancing economic thought and actuarial practice, it is yet something more. It is Systems Thinking. To loop over to the metaphors of ecological systems (as Nico did) is still more of what is, in fact, Systems Thinking of a <em>cross-disciplinary<\/em> nature.<\/p>\n\n\n\n<p>The sense was this. Life is ever creating free energy. The second law of thermodynamics is thus driving an ecosystem, begun with pioneering types able to exploit abundant resources, ever inexorably towards the climax community. Which community is especially talented in creating systems of exquisitely intricate, inter-related structure, not least for storing the mobilised and captured resources. If this evolution were so, the behaviour of ecosystems \u2014 <em>and<\/em> economies (because they were the focal destination of Nico\u2019s seminar) \u2014 would be dominated in turn by two classes of biological species and agents: the swashbuckling, risk-taking, pioneering types; and the \u201ccomplexifying\u201d, risk-managing, resource-conserving types.<\/p>\n\n\n\n<p>So there can obviously be something significant about the <strong><em>evolutionary<\/em><\/strong> in economic thought and actuarial practice.<\/p>\n\n\n\n<p><strong>Animal Spirits and the Sociability of Beings<\/strong><\/p>\n\n\n\n<p>Along the way, however \u2014 in all of this evolution and biological life\u2019s creative pursuit of thermodynamically free energy \u2014 some of those animal spirits of Keynes and the human propensities of Greenspan<a href=\"#_ftn1\"><sup>1<\/sup><\/a> have inveigled their way in, not least in respect of we humans as social beings. How very inconvenient! How very disruptive. Like those all-too-familiar gales and avalanches of Schumpeterian creative destruction \u2014 if not Mazzucato\u2019s \u201cdestructive creations\u201d, or Buffett\u2019s <em>ur-alt<\/em> \u201ceconomic discontinuities\u201d \u2014 which set seemingly inexorable progress back from time to time.<\/p>\n\n\n\n<p>So when it comes to animal spirits and sociability, there also has to be something significant about the <strong><em>institutional<\/em><\/strong> in economic thought \u2014 something about how we organise ourselves into different groups (of \u201cswashbucklers\u201d and \u201ccomplexifiers\u201d, for instance); into businesses, IFoA\u2019s, FinSTIC\u2019s, and the like; into different ways of problem-solving; profoundly differing ways of making decisions; and just as profoundly different ways of economising. Into ways, in sum, deeply entrenched and solidified as so-called Durkheimian social solidarities (no less).<\/p>\n\n\n\n<p><strong>Something Obviously \u201cEvolutionary\u201d \u2014<\/strong> <strong>and Something Not-so-obviously \u201cInstitutional\u201d \u2014About This Systems Thinking<\/strong><\/p>\n\n\n\n<p>As so often, things for me begin with Ecology. Usually they pass through and are greatly enriched by social Anthropology. At the <a href=\"http:\/\/finstic.org.uk\">FinSTIC website<\/a> they must have something to say of Actuarial Practice. But to get to a way of infusing Keynes\u2019 animal spirits into economic thought, and there addressing them, requires at bottom something from Neuroscience and the evolution of the body\u2019s nervous system and brain functions. For it is from that destination that (conceptually) those animal spirits can be infused back into Economics, courtesy of the institutional embeddedness of Cultural Theory (from Social Anthropology).<\/p>\n\n\n\n<p>I too (like Nico) am asking myself \u2014 or rather others, hopefully economists among them \u2014 just what might these things mean for Economics?<\/p>\n\n\n\n<p><strong>Appropriating Ecology; Pontificating on Economics<\/strong><\/p>\n\n\n\n<p>An acknowledgement, therefore, is necessary. A certain intellectual humility is indispensable to enquiry in this inter- and multi-disciplinary realm. I note thus these two things. First, \u201cecology\u201d, with its ecosystems, must be one of the most appropriated disciplines of our time. If I declare myself as an engineer, and a control engineer (worse still), I can sense horror welling up in some ecologists. Second, if instead I were a trained economist, I would feel just a little irked by how many people from so very many other disciplines are for ever telling me what is the essence of \u201cmy\u201d discipline.<\/p>\n\n\n\n<p>And a third thing, for which I shall not apologise. I challenge anyone to say something of substance about Systems Thinking in less than 650 words, which is about what I have used up in coming just this far!<\/p>\n\n\n\n<p><strong>A Health Warning Too<\/strong><\/p>\n\n\n\n<p>To skim across the tops of Ecology, Anthropology, Actuarial Practice, Economics, Neuroscience, and Control Engineering \u2014 in the dozen or so additional pages of my supporting document \u2014 is to court obvious criticisms: of an excess of conceptual leaps in an argument spread molecularly thin over too many disciplines. It is essential, however, that I travel to such lengths at such considerable speed, to demonstrate adequately in one shortish document what I intend in the value of cross-disciplinary Systems Thinking.<\/p>\n\n\n\n<p>My end-point images, of a hermit-like Adaptor strategy for decision-making and a mouse- or moose-like financial asset class, may evoke nothing but the haughty disbelieving scoff. By way of compensation, I provide an Appendix on what must pass for a \u201cprocedure\u201d of cross-disciplinary Systems Thinking. I also offer indications of how each skimming touch of a discipline can be anchored in the basis of more substantial literature and reasoning, mostly in footnotes \u2014 including a retort to any haughty disbelieving scoff.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>Bruce&#8217;s full paper can be found <a href=\"https:\/\/finstic.org.uk\/wp-content\/uploads\/2020\/12\/Blog-Post_KeynesSpirits.pdf\">here<\/a>.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><a href=\"#_ftnref1\"><sup>1<\/sup><\/a> Greenspan, A (2013), <em>The Map and The Territory. Risk, Human Nature, and the Future of Forecasting<\/em>, Penguin, New York.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This page highlights some of the work of FinSTIC members. If you have content that you feel would be relevant to highlight to members of our community then please contact us Complexity challenge Whilst not a work by a FinSTIC member, there is an interesting articly in the Actuary magazine by Lawrence Habahbeh on understanding &hellip; <a href=\"https:\/\/finstic.org.uk\/?page_id=213\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;FinSTIC members&#8217; work&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FinSTIC members&#039; work - FinSTIC<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/finstic.org.uk\/?page_id=213\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FinSTIC members&#039; work - FinSTIC\" \/>\n<meta property=\"og:description\" content=\"This page highlights some of the work of FinSTIC members. 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