Reports of our death are an exaggeration: Difference between revisions

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 Now, the dilemma. If, over thirty years, you have systematically recruited for those who best display machine-like qualities — if that is what your education system targets, your qualification system credentialises and your recruitment and promotion system rewards —  ''your people won't be very good at it weaving magic''.
-Most likely, ''nor will you''. You will have made it to the top of your organisation by exhibiting exactly the qualities that your organisation is geared to solve for. These will not generally include a rogue streak. Multinational financial services organisations do not prefer Luke cannons all other things being equal. Your organisation will instead be ''fearful'' of human magic. Will see in it the seeds of [[Enron]], or [[Financial disasters roll of honour|Kerviel]], or [[Madoff]], or [[Archegos]].
+Most likely, leaders of banking organisations, ''nor will you''. You will have made it to the top of your organisation by steadfast demonstration of exactly the qualities that your organisation aspires to. If a bank is enculturated to elevate algorithms over all else, you should expect its chief executive to say things like “Tomorrow, we will have ''robots behaving like people”. This can only be true, or a good thing, ''if you expect your best people to behave like robots''.
-But these disasters came about ''notwithstanding the modernist method''. They are ''products'' of it. These mendacious people found and exploited [[Zero-day vulnerability|zero-day flaws]] in the [[modernist]] system, ''which is [[Air crashes v financial crashes|what we should expect clever but dishonest people to do]]''. They will seek out the vunerabilities and they will exploit them. They will do this exactly  where the risk engines are not looking. Apparently harmless, sleepy backwaters.
+Robotic people do not generally have a rogue streak. They are not loose cannons. They no not call “bullshit”. They do not question their orders. They do not answer back.
-For a fully [[Risk taxonomy|taxonomised]] system, that runs entirely in [[algorithm]], however smart, derived from the [[Policy|scar tissue]] of the past, is ''literally blind'' to [[Zero-day vulnerability|zero-day vulnerabilities]]. Unless mediated by people thinking and viewing the world unconventionally, ''it will repeatedly fail''. And this has been the [[financial disasters roll of honour|tale of the financial markets]] since Hammurabi published his code.
+Multinational financial services organisations do not value people who do. They value the ''fearful''.  Those who distrust “human magic”. They find it in the wreckage of [[Enron]], or [[Financial disasters roll of honour|Kerviel]], or [[Madoff]], or [[Archegos]]. Bad apples. [[Operator error]]. People who did not play by the rules.
-The age of the machines — our complacent faith in them — has made the situation worse. Machines will conspire to ignore “human magic”, when offered, which says “this is not right”. That magic was woven by [[Enron Corporation|Bethany MacLean]]. [[Collateralised debt obligation|Michael Burry]]. [[Harry Markopolos]]. [[Wirecard|Dan McCrum]]. The formalist system systematically ignored them, fired them, tried to put them in prison.
+The run [[post mortem]]s: with the rear-facing forensic weaponry of [[internal audit]], [[external counsel]] they reconstruct the [[fog of war]] and build a narrative around it. The solution: ''more systems. More control. More elaborate algorithms. More rigid playbooks. The object of the exercise: eliminate the chance of human error. Relocate everything to process.
+Yet the accidents keep coming. Our [[financial crashes roll of honour]] refers. They happen with the same frequency, and severity, notwithstanding the additional sedimentary layers of machinery we develop to stop them.
+Hypothesis:  these disasters are not prevented by high-modernism. They are a symptom of it.  They are its ''products''.
+===Zero-day vulnerabilitues===
+“[[Bad apple]]s” find and exploit [[Zero-day vulnerability|zero-day flaws]] in the [[modernist]] system, ''which is [[Air crashes v financial crashes|what we should expect bad apples to do]]''. They will seek out the vunerabilities and they will exploit them. They will find them exactly where the modernist machines are not looking: Apparently harmless, sleepy backwaters.
+But who the bad apples are depends on who is asking, and when.
+'''After-the-fact-bad-apples''': Nick Leeson, Jeff Skilling, Ken Lay, Jerome Kerviel, Kweku Abodoli, Elizabeth Holmes, Arif Naqvid, Charlie Javis, Jo Lo, Bernie Madoff, Sam Bankman-Fried.
+''None'' of these were bad apples ''before the fact''. They were Heroes. Chairman of NASDAQ. Visionary innovators.
+For a fully [[Risk taxonomy|taxonomised]] system, that runs entirely by [[algorithm]], however smart, derived from the [[Policy|scar tissue]] of the past, is ''literally blind'' to [[Zero-day vulnerability|zero-day vulnerabilities]]. Unless mediated by people thinking and viewing the world unconventionally, ''it will repeatedly fail''. And this has been the [[financial disasters roll of honour|tale of the financial markets]] since Hammurabi published his code.
+The age of the machines — our complacent faith in them — has made the situation worse. Machines will conspire to ignore “human magic”, when offered, especially when it says “this is not right”.
+That kind of magic was woven by [[Enron Corporation|Bethany MacLean]]. [[Collateralised debt obligation|Michael Burry]]. [[Harry Markopolos]]. [[Wirecard|Dan McCrum]]. The formalist system systematically ignored them, fired them, tried to put them in prison.
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 To be sure, the tech stacks of most banks ''are'' dismal. Perez is right about that. Most are sedimented, interdependent concatenations of old mainframes, Unix servers, IBM 386s, and somewhere in the middle of the thicket will be a wang box from 1976 with a CUI interface that can’t be switched off without crashing the entire network. These patchwork systems are a legacy of dozens of mergers and acquisitions and millions of lazy, short-term decisions to fix broken systems with sellotape and glue rather than maintaining and overhauling them properly. They are over-populated with low quality staff. Citigroup claims to employ 70,000 technology experts worldwide, and, well, [[Citigroup v Brigade Capital Management|Revlon]].
-To be fair, it ''is'' hard to imagine Amazon accidentally wiring half a billion dollars  to customers because of crappy software. Banks do have a first-mover disadvantage here, as most didn’t start thinking of themselves as tech companies until the last twenty years, by which stage their tech infrastructure was intractably convoluted.
+It ''is'' hard to imagine Amazon accidentally wiring half a billion dollars  to customers because of crappy software. Banks do have a first-mover disadvantage here, as most didn’t start thinking of themselves as tech companies until the last twenty years, by which stage their tech infrastructure was intractably convoluted.
 We ''presume'' Apple, Google and Amazon, who always have thought of themselves as tech companies, are naturally better at it and more disciplined about their tech infrastructure.<ref>See the [[Bezos memo]].</ref> But you never know.