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jerryking : elder_wisdom   3

Opinion: My declining years – and yours
JULY 5, 2019 | The Globe and Mail | by MARGARET WENTE

According to the experts, certain parts of my brain responsible for cognitive function are literally shrinking. My brain’s blood flow is slowing down, just like the rest of me. The inescapable result is lapses in the synapses. I’ve always thought that the worst threat to my vanity was advancing wrinkles. But now I know it’s cognitive slippage.

Perhaps it’s some consolation that my friends are getting dotty, too. Sure, they’re working gamely to keep their brains in tip-top shape. They do word puzzles, or try to learn a language. They take supplements and eat more leafy greens. Good luck to them. So far, nobody has figured out how to turn back the neurological clock.

The more I learn about brain aging, the more obvious it is that the kids really are smarter than we are. “The data are shockingly clear that for most people, in most fields, professional decline starts earlier than almost anyone thinks,” writes Arthur Brooks (no cognitive slouch himself) in a new essay for The Atlantic. He found that most of us reach our mental peak around 20 years after the start of our careers. We do our best work in our 40s and 50s and it’s all downhill from there.

People in different types of work peak at different ages, just as athletes do. Those who rely heavily on fluid intelligence – the ability to reason, think fast and solve problems in unique and novel situations – peak much younger than average. Mr. Brooks says his line of work is a good example. (He has just retired as the head of a well-known U.S. think tank.) “The most profound insights tend to come from those in their 30s and early 40s.”

Silicon Valley entrepreneurs, chess grand masters and nuclear physicists are even more precocious – which means they burn out early. By the time they hit their 30s they’re already in creative decline. By contrast, lawyers, judges and professors draw more on what’s called crystallized intelligence – a stock of knowledge built up over time.They can coast on that knowledge well into their 60s. For most of us, however, cognitive decline begins in middle age.
aging  Arthur_Brooks  cognitive_skills  decline  elderly  elder_wisdom  journalism  Margaret_Wente  mental_dexterity  precociousness  retirement 
july 2019 by jerryking
How to avert catastrophe
January 21, 2017 | FT | Simon Kuper.

an argument: people make bad judgments and terrible predictions. It’s a timely point. The risk of some kind of catastrophe — armed conflict, natural disaster, and/or democratic collapse — appears to have risen. The incoming US president has talked about first use of nuclear weapons, and seems happy to let Russia invade nearby countries. Most other big states are led by militant nationalists. Meanwhile, the polar ice caps are melting fast. How can we fallible humans avert catastrophe?

• You can’t know which catastrophe will happen, but expect that any day some catastrophe could. In Tversky’s words: “Surprises are expected.” Better to worry than die blasé. Mobilise politically to forestall catastrophe.
• Don’t presume that future catastrophes will repeat the forms of past catastrophes. However, we need to expand our imaginations. The next catastrophe may take an unprecedented form.
• Don’t follow the noise. Some catastrophes unfold silently: climate change, or people dying after they lose their jobs or their health insurance. (The financial crisis was associated with about 260,000 extra deaths from cancer in developed countries alone, estimated a study in The Lancet.)
• Ignore banalities. We now need to stretch and bore ourselves with important stuff.
• Strengthen democratic institutions.
• Strengthen the boring, neglected bits of the state that can either prevent or cause catastrophe. [See Why boring government matters November 1, 2018 | | Financial Times | Brooke Masters.
The Fifth Risk: Undoing Democracy, by Michael Lewis, Allen Lane, RRP£20, 219 pages. pinboard tag " sovereign-risk" ]
• Listen to older people who have experienced catastrophes. [jk....wisdom]
• Be conservative. [jk...be conservative, be discerning, be picky, be selective, say "no"]
Amos_Tversky  apocalypses  black_swan  boring  catastrophes  conservatism  democratic_institutions  disasters  disaster_preparedness  disaster_myopia  elder_wisdom  emergencies  financial_crises  imagination  imperceptible_threats  Nassim_Taleb  natural_calamities  noise  silence  Simon_Kuper  slowly_moving  surprises  tips  threats  unglamorous 
january 2017 by jerryking
How to be wise before the event
March 9 2009 | Financial Times | By Stefan Stern.

Restraint is back in fashion in these recessionary times. People have lost their appetite for risk.

But hang on a minute. No risk will mean no reward. You need new markets and customers to grow, and that means taking steps into the unknown. I doubt that anyone will be suggesting, in this newspaper’s new series of articles on the future of capitalism, that risk-taking should be abolished.

Bad risk-management helped get us into the current mess. It is vital that we learn the right lessons about risk from the crisis. What are they?

The new edition of Harvard Business Review contains a lucid piece of analysis from René Stulz, professor of banking and monetary economics at Ohio State University’s Fisher College of Business. While his principal focus is on the financial sector, the diagnosis will be helpful to managers in any business or organisation.

Prof Stulz describes six ways in which risk has been mismanaged. First, there has been too much reliance on historical data among today’s decision-makers. Extrapolating from the past can provide, at best, only partial guidance for the future. Financial innovation has created a new world. No wonder some managers were unprepared for the calamitous fall in asset prices and demand. This collapse was unimaginable to anyone basing their thinking on post-war performance alone.

Second, narrow daily measures – in banking these are known as “value at risk” measures – have underestimated the risks that are being run. The assumption behind a daily measure of risk is that action can be taken quickly (through an asset sale) to remove that risk. But, as the current crisis has shown, such rapid moves become impossible when markets seize up.

Third, knowable risks have been overlooked. Managers who work in silos may appreciate the risks that they personally are exposed to. But they may not see how risks being run elsewhere in the business could affect them too. Someone – a chief risk officer? – needs to track them all.

Fourth, concealed risks have been overlooked. Incentives have proved to be particularly dangerous in this regard. Some traders and lenders may have enjoyed taking risky decisions that in the short term appeared to be delivering well for them and their organisations. But they had no incentive to report any downside risk. And unreported risks tend to expand.

Fifth, there has been a failure to communicate effectively. It is dangerous, Prof Stulz says, when risk managers are so expert in their field that they lose the ability to explain in simple terms what they are doing. The board may develop a false sense of security by failing to appreciate the complexity of the risks being managed.

Last, risks have not been managed in real time. Organisations have to be able to monitor fast-changing markets and where necessary respond to them without delay.

Prof Stulz offers a useful technical analysis. But a true understanding of risk also requires a maturity of outlook, an ability to see the big picture, and deep experience. This last is a rare commodity: impossible to fake and acquired only over time.

In a new McKinsey publication called What Matters, the 90-year-old investment manager and author Peter Bernstein offers some sober insights. “What is risk management all about anyway?” he writes. “We use the words as though everybody understands what we are talking about. But life is not that simple. Risk means more things can happen than will happen – which is a fancy way of saying we do not know what is going to happen.”

Mr Bernstein’s central point – not revolutionary, but unarguable – is that downside risks must be assessed rigorously. Someone old enough to remember the Wall Street crash is probably worth listening to right now.[JCK: elder wisdom]

“Nothing is 100 per cent sure,” Mr Bernstein says. “While a 95 per cent probability is statistically significant, that still leaves us in the dark about the remaining 5 per cent; we may decide to accept that uncertainty and bet on the 95 per cent sure thing, but there is still a possibility of being wrong.

“The crucial question to ask is, ‘What would be the consequence if that 5 per cent chance comes to pass?’ ”

Welcome to the less exciting but more soundly based era of calculated risks. For the foreseeable future, business leaders will be trying to be wise before rather than after the event.
beforemath  business  communicating_risks  downside_risks  elder_wisdom  false_sense_of_security  fast-changing  financial_innovation  hidden  historical_data  management  McKinsey  overreliance  Peter_Bernstein  recessions  real-time  risks  risk-assessment  risk-management  Stefan_Stern  the_big_picture  VaR  what_really_matters  wisdom 
may 2009 by jerryking

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