Catataxis – When more of the same is different
Catataxis is a neologism from the Greek for ‘level confusion’, one of the key factors behind the anomie of modern life, caused by massive changes in scale without the requisite changes in attitudes, institutions and social mechanisms. It seeks to explain the difference between the individual and the mass, the micro and the macro – why, as things get bigger, it’s not just the scale that changes. Something else fundamentally changes too.
Published by
Quartet Books (20 Oct. 2011)
Bolt from the Blue
A guide for every CEO faced with a disaster not of his own making, such as a regulatory intervention, a supply chain crisis, a disruptive whistleblower or a cyber attack. It explains why dealing with a potentially fatal corporate disruption is not just a matter for lawyers and why you need the full spectrum of PR, shareholders, stakeholders and government all on side. This book spells out the lessons that can be learnt from the biggest corporate disasters of the last 15 years. It explains what steps can be taken to get through a crisis and come out the other side with both reputation and company intact.
Published by
Elliott & Thompson (26 Jun. 2014)
Heartbeat in the Fog
Examining the balance sheets of the S&P 500,some 83% of their value now stems from intangible assets, up from only 20% or so forty years ago. These intangibles are a heterogeneous collection of items such as service contracts, intellectual property, goodwill, software, trademarks, data, rights of use and other non-physical goods. Unlike property or machinery, they are hard to classify and even harder to value. This is the fog.
Traditional insurance is inadequate in several ways. One of which is the growing coverage gap; the difference between the damage inflicted by events and the amount of insurance cover. In tangible assets, like property, this has ballooned in recent years and now stands at $136bn. But if tangible asset insurance with its 400-year history still falls short of the mark, try glancing across to the intangible side of the balance sheet. These assets are hardly insured at all. We are still at the starting line.
The challenge is that in the slippery fog of intangibles, financial values, and indeed damage, is hard to pin down. This is where parametric insurance comes in. The beauty of parametric insurance is that it is free from the concept of demonstrable asset damage, so you don’t need to figure out what a particular asset is worth. Parametric insurance is as simple as an if-then statement: if this, then pay that. All that is needed is a trigger and a pay-out mechanism. That is the heartbeat in the fog.
35 Views of Cyber Risk
The cover picture – “Great Wave off Kanagawa” is a global icon. What is less well known is that it is actually an image of Mount Fuji. Look closer and you will see Mount Fuji’s conical tip poking up above the horizon in the background. It forms part of a series of prints by Hokusai in 1830 called “36 views of Mount Fuji”.
The active volcano of Mount Fuji sits at the intersection point of three tectonic plates. The Eurasian Plate, the North American Plate and the Philippine Sea Plate which form a triple junction at this spot. Cyber risk also sits at the nexus of three ‘plates’: the three different disciplines of information technology, security and insurance. Each of these three subjects has its own conceptual framework, its unique acronyms and specialist expertise. To truly understand cyber risk, we must slowly circle through each zone of this triad, gaining a 360-degree view of the half-glimpsed entity at the centre.
Hokusai portrayed Japan as a series of 36 prints. We offer our view of cyber risk as a set of 35 views, one less than 36, in due deference to the master.
The murmuration of the starlings
Picture a flock of starlings on a warm autumn evening. As the birds group together in the darkening sky, the patterns they make coalesce and fragment unexpectedly. It is jittery, unstable, and hard to predict. Driven by the freedom of the individual, it is still bound into a loose unity of purpose — just like consumer trends in the modern economy. The complexity of this behavior is created by three simple rules: go in the same direction as the group, don’t bump into anyone, and try to get to the middle. The inherent instability comes from the balance of two opposing forces. There is the push of trying to be different and the pull of trying to belong. The starlings’ behavior has been sculpted by the historic effects of predatory attacks. Stragglers get picked off, so the best strategy is “try to be different, but not too different”. This is also good advice for a cyber security posture.
A murmuration of starlings exists in the liminal zone between group and individual. Is it a single entity or a collection of separate parts? This duality of group versus individual is fundamental to the understanding of cyber risk. In all lines of insurance, we have threats—but in cyber we have threat actors. That second word pulls us out of the realm of physics into that of biology and the social sciences like psychology and behavioral economics. That’s why all the analogies in this book are drawn from biology. Living organisms give us a better lens than inanimate matter when contemplating cyber risk.
