recentpopularlog in

jerryking : precaution   8

THE YEAR IN IDEAS: A TO Z.; Precautionary Principle
Dec. 9, 2001 | The New York Times | By Michael Pollan.

New technologies can bring mankind great benefits, but they can also cause accidental harm [JCK: "unintended consequences"]. How careful should society be about introducing innovations that have the potential to affect human health and the environment? For the last several decades, American society has been guided by the ''risk analysis'' model, which assesses new technologies by trying to calculate the mathematical likelihood that they will harm the public. There are other ways, however, to think about this problem. Indeed, a rival idea from Europe, the ''precautionary principle 2/3'' has just begun making inroads in America....risk analysis hasn't done a very good job predicting the ecological and health effects of many new technologies. It is very good at measuring what we can know -- say, the weight a suspension bridge can bear -- but it has trouble calculating subtler, less quantifiable risks.......Whatever can't be quantified falls out of the risk analyst's equations, and so in the absence of proven, measurable harms, technologies are simply allowed to go forward......When Germany discovered in the 70's that its beloved forests were suddenly dying, there was not yet scientific proof that acid rain was the culprit. But the government acted to slash power-plant emissions anyway, citing the principle of Vorsorge, or ''forecaring.'' Soon, Vorsorgeprinzip -- the forecaring, or precautionary, principle -- became an axiom in German environmental law. Even in the face of scientific uncertainty, the principle states, actions should be taken to prevent harms to the environment and public health.

Even in the face of scientific uncertainty, the principle states, actions should be taken to prevent harms to the environment and public health......world-trade rules are based on risk-analysis rather than precaution, so if the health risk of, say, eating hormone-treated beef has not been proved, the World Trade Organization ruled that a ban is illegal....the precautionary principle poses a radical challenge to business as usual in a modern, capitalist, technological civilization. ....however, because technological innovations are out and on the market long before the scientific proof of their harms have been gathered, often the public bears the burden/cost of the proving the harm, rather than the innovating company.....If introduced into American law, the precautionary principle would fundamentally shift the burden of proof. The presumptions that flow from the scientific uncertainty surrounding so many new technologies would no longer automatically operate in industry's favor. Scientific uncertainty would no longer argue for freedom of action but for precaution and alternatives.....Critics argue that the precautionary principle is ''antiscientific.'' No and yes. No, in the sense that it calls for more science in order to dispel the uncertainties surrounding new technologies and to develop less harmful alternatives. And yet there is a sense in which the idea is ''antiscientific,'' if by scientific we mean leaving it to scientists to tell us what to do. For the precautionary principle recognizes the limitations of science -- and the fact that scientific uncertainty is an unavoidable breach into which ordinary citizens sometimes must step and act.
==============================================

From Market Research: Safety Not Always in Numbers | Qualtrics ☑

Author: Qualtrics|July 28, 2010


Albert Einstein once said, “Not everything that can be counted counts, and not everything that counts can be counted.” [Warning of the danger of overquantification) Although many market research experts would say that quantitative research is the safest bet when one has limited resources, it can be dangerous to assume that it is always the best option.
'70s  beforemath  burden_of_proof  environment  evidence_based  Germany  health_risks  Michael_Pollan  overquantification  precaution  principles  public_health  risk-analysis  scientific_uncertainty  technology  unintended_consequences  WTO 
4 weeks ago by jerryking
The Optimist's Telescope: Thinking Ahead in a Reckless Age
by Bina Venkataraman
Instant gratification is the norm today—in our lives, our culture, our economy, and our politics. Many of us have forgotten (if we ever learned) how to make smart decisions for the long run. Whether it comes to our finances, our health, our communities, or our planet, it’s easy to avoid thinking ahead.

The consequences of this immediacy are stark: Superbugs spawned by the overuse of antibiotics endanger our health. Companies that fail to invest stagnate and fall behind. Hurricanes and wildfires turn deadly for communities that could have taken more precaution. Today more than ever, all of us need to know how we can make better long-term decisions in our lives, businesses, and society.

Bina Venkataraman sees the way forward. A former journalist and adviser in the Obama administration, she helped communities and businesses prepare for climate change, and she learned firsthand why people don’t think ahead—and what can be done to change that. In The Optimist’s Telescope, she draws from stories she has reported around the world and new research in biology, psychology, and economics to explain how we can make decisions that benefit us over time. With examples from ancient Pompeii to modern-day Fukushima, she dispels the myth that human nature is impossibly reckless and highlights the surprising practices each of us can adopt in our own lives—and the ones we must fight for as a society. The result is a book brimming with the ideas and insights all of us need in order to forge a better future.
anticipating  beforemath  books  climate_change  decision_making  far-sightedness  foresight  forward_looking  ideas  immediacy  instant_gratification  optimism  precaution  recklessness 
september 2019 by jerryking
How the ultra-high-net-worth investor prepares for a recession
August 27, 2019 | - The Globe and Mail | by TARA DESCHAMPS, SPECIAL TO THE GLOBE AND MAIL.

investment managers thinking more strategically about how to protect their clients’ wealth, which includes everything from traditional stocks and bonds to alternative assets such as real estate, private equity and debt.

Mr. Janson, who still has “deep, long scars” from the 2008 recession, which he spent in Switzerland as a portfolio manager, says his main advice for UHNW individuals is to diversify. By spreading assets around, investors have a better chance of softening the blow to their overall portfolio if one sector is hit harder than others.

“Too many Canadians have too many eggs in one or two baskets, usually stocks and bonds,” Mr. Janson says. “You should be thinking about all asset classes, whether that’s stocks, bonds, private equity, private debt, real estate debt, real estate equity, hedge funds and others.”

Mr. Janson also keeps an eye on real estate investments as an opportunity. Housing prices typically fall during a recession, and more homes hit the market when owners can no longer afford the mortgages or need to shore up cash.

If the UHNW want to be involved in real estate in a recession, Mr. Janson recommends they look for “defensive” pockets in the market.
asset_classes  diversification  high_net_worth  howto  personal_finance  precaution  preparation  recessions 
august 2019 by jerryking
Navigating a Breathtaking Level of Global Economic Change
November 14, 2017 |The New York Times | by Andrew Ross Sorkin.
you’d think that any sense of “faith” in the global economy might be shaken, or at least, uncertain given events like North Korea, Russian interference in elections in the United States, post-Brexit Europe, and hurricane damage.

Not so.

In conversation after conversation with some of the nation’s top business leaders and chief executives last week, there is a stunning amount of genuine “confidence” in our economy here and, yes, even globally.

“I’m very surprised,” Laurence D. Fink, the founder of BlackRock, the largest money manager in the world overseeing some $6 trillion, said at The New York Times DealBook conference last Thursday, describing his new sense of optimism.......Mark Cuban, whose disdain for President Trump is so acute that he is considering running for president himself in 2020 as a Republican because it “means you get to go head-on with Trump right in the primaries — and so there’s nothing I’d have more fun doing.” Still, though, he said he believes the economy is in good enough shape that when it comes to investing in the stock market, “I just, you know, I just let it ride.”

Mr. Cuban, owner of the Dallas Mavericks, said he keeps a small amount of cash on hand as a precaution. “I keep a little bit, you know, as a hedge. I call it my ‘Trump hedge’ because you just never know.....Earlier in 2017, The Conference Board reported that chief executives’ confidence had reached 2008 pre-recession highs in the first quarter.....there are pockets of the economy that are causing anxiety. “The last two or three years have not been fun whatsoever,” Mickey Drexler, the chairman of J. Crew, said at the conference about the traditional retail business, which has been upended by Amazon and changes in consumer behavior. “It’s been miserable.” Those challenges are extending to mall owners and commercial real estate, too..... is the stock market a proxy for the economy of America?....“In the aftermath of corporate and public-sector disasters, it often emerges that participants fell prey to a collective form of willful blindness and overconfidence: mounting warning signals were systematically cast aside or met with denial, evidence avoided or selectively reinterpreted, dissenters shunned,” Roland Bénabou a professor at Princeton University wrote in a seminal work on confidence and groupthink. “Market bubbles and manias exhibit the same pattern of investors acting ’colorblind in a sea of red flags,’ followed by a crash.”
Amazon  Andrew_Sorkin  BlackRock  bubbles  CEOs  commercial_real_estate  consumer_behavior  confidence  denials  global_economy  groupthink  J._Crew  Laurence_Fink  manias  Mark_Cuban  market_crash  Mickey_Drexler  optimism  overconfidence  precaution  retailers  selection_bias  shifting_tastes  shopping_malls  warning_signs  willful_blindness 
november 2017 by jerryking
Mental bias leaves us unprepared for disaster
August 14, 2017 | Financial Times | Tim Harford.

Even if we could clearly see a crisis coming, would it have made a difference?

The 2004 storm, Hurricane Ivan, weakened and turned aside before striking New Orleans. The city was thus given almost a full year's warning of the gaps in its defences. The near miss led to much discussion but little action.

When Hurricane Katrina hit the city, evacuation proved as impractical and the Superdome as inadequate as had been expected. The levees broke in more than 50 places, and about 1,500 people died. New Orleans was gutted. It was an awful failure but surely not a failure of forecasting.

Robert Meyer and Howard Kunreuther in The Ostrich Paradox argue that it is common for institutions and ordinary citizens to make poor decisions in the face of foreseeable natural disasters, sometimes with tragic results.[ JCK: poor decisions = bad decisions]

There are many reasons for this, including corruption, perverse incentives or political expediency. But the authors focus on psychological explanations. They identify cognitive rules of thumb that normally work well but serve us poorly in preparing for extreme events.

One such mental shortcut is what the authors term the “amnesia bias”, a tendency to focus on recent experience (i.e. "disaster myopia" the human tendency to dismiss long-ago events as irrelevant, to believe This Time is Different and ignore what is not under one’s nose). We remember more distant catastrophes but we do not feel them viscerally. For example, many people bought flood insurance after watching the tragedy of Hurricane Katrina unfold, but within three years demand for flood insurance had fallen back to pre-Katrina levels.

We cut the same cognitive corners in finance. There are many historical examples of manias and panics but, while most of us know something about the great crash of 1929, or the tulip mania of 1637, those events have no emotional heft. Even the dotcom bubble of 1999-2001, which should at least have reminded everyone that financial markets do not always give sensible price signals, failed to make much impact on how regulators and market participants behaved. Six years was long enough for the lesson to lose its sting.

Another rule of thumb is “optimism bias”. We are often too optimistic, at least about our personal situation, even in the midst of a more generalized pessimism. In 1980, the psychologist Neil Weinstein published a study showing that people did not dwell on risks such as cancer or divorce. Yes, these things happen, Professor Weinstein’s subjects told him: they just won’t happen to me.

The same tendency was on display as Hurricane Sandy closed in on New Jersey in 2012. Robert Meyer found that residents of Atlantic City reckoned that the chance of being hit was more than 80 per cent. That was too gloomy: the National Hurricane Center put it at 32 per cent. Yet few people had plans to evacuate, and even those who had storm shutters often had no intention of installing them.

Surely even an optimist should have taken the precautions of installing the storm shutters? Why buy storm shutters if you do not erect them when a storm is coming? Messrs Meyer and Kunreuther point to “single action bias”: confronted with a worrying situation, taking one or two positive steps often feels enough. If you have already bought extra groceries and refuelled the family car, surely putting up cumbersome storm shutters is unnecessary?

Reading the psychological literature on heuristics and bias sometimes makes one feel too pessimistic. We do not always blunder. Individuals can make smart decisions, whether confronted with a hurricane or a retirement savings account. Financial markets do not often lose their minds. If they did, active investment managers might find it a little easier to outperform the tracker funds. Governments, too, can learn lessons and erect barriers against future trouble.

Still, because things often do work well, we forget. The old hands retire; bad memories lose their jolt; we grow cynical about false alarms. Yesterday’s prudence is today’s health-and-safety-gone-mad. Small wonder that, 10 years on, senior Federal Reserve official Stanley Fischer is having to warn against “extremely dangerous and extremely short-sighted” efforts to dismantle financial regulations. All of us, from time to time, prefer to stick our heads in the sand.
amnesia_bias  bad_decisions  biases  books  complacency  disasters  disaster_myopia  dotcom  emotional_connections  evacuations  financial_markets  historical_amnesia  lessons_learned  manias  natural_calamities  optimism_bias  outperformance  overoptimism  panics  paradoxes  perverse_incentives  precaution  recency_bias  short-sightedness  single_action_bias  Tim_Harford  unforeseen  unprepared 
august 2017 by jerryking
A Few Necessary Precautions Before You Buy That Business
May 1991 | Profit-Building Strategies for Business Owners |

Buying a business takes great care. The first decision is what type of business to buy. For most people. it is best to choose a field in which they have had some experience. Sources for businesses up for sale include classified advertisements, business brokers. and informal networking. Next is a thorough investigation based on care and common sense. An initial question to ask is why the present owner is selling. The next step is to carefully examine the business. At this stage. an attorney and accountant can help check business books by looking for discrepancies in records of sales, earnings. and expenses. It is also important to check for pending lawsuits. If the sale involves real estate. it is vital to check for records of undisclosed liabilities. The next step is to determine how to finance the business. Usually. the new owner must put down of the purchase price and finance the balance. Sources for the remaining financing include the Small Business Administration. banks, and commercial lenders.
buying_a_business  CAMEX  mergers_&_acquisitions  M&A  decision_making  owners  precaution 
january 2013 by jerryking
reportonbusiness.com: Disaster relief
November 28, 2008 at 2:46 PM EST G&M article by DOUG STEINER
Rules for post-disaster investing.
Step 1: Cope and gather new data. Smart people in hurricane-prone areas build defences into their homes and businesses, then watch the weather. Do you do that with your investments?.... Don't invest aimlessly assuming that you'll be able to avoid a crash, then buy at the bottom. I don't know when the next market plunge will happen or how deep it will be, but I'm fortifying my investment castle against disaster by spending less and saving more....Look for new sources of information.
Step 2: Analyze the data. I'm not smart, but I looked at historic data and made a connection-what happens in the U.S. usually happens here, too. We worried enough to sell our house in 2007, but I wasn't disaster-hardened enough to rent, so we bought a smaller house.
Step 3: Consider what country you're in
Step 4: Identify the worst thing that could happen right now. You think Canada's economy is grim? How about the city of Detroit, where the median price of a house or condo dropped to $9,250 (U.S.) in September from $21,250 (U.S.) just a year earlier? Could things get that bad here? Almost certainly not.
Step 5: Act when things stop getting worse (there's an element of "next play" here). Don't wait till they start getting better. If you wait for positive signs, it will be too late. I like hotpads.com, the U.S. real estate search engine with information on foreclosures from RealtyTrac. It lets you swoop across a map of the country like a vulture, looking for distressed properties. I'm not looking in Detroit, but I am interested in Longboat Key, Florida. I'm also combining the online information on foreclosures with updates from a local real estate agent who's desperate for buyers, and who forwards me every property listed in the area.
Step 6: Find out who's ahead of the curve and learn from them. The most interesting financial analysis these days isn't in stock and bond markets-it's in the markets for things like natural disaster insurance. A 2007 study, led by Laurens Bouwer from the Institute of Environmental Studies at Vrije University in Amsterdam (remember that Dutch people living below sea level are keenly interested in floods), includes estimates of the costs of future weather-related disasters. By 2015, potential financial losses from disasters in the world's 10 largest cities will likely climb by up to 88%. Three recommendations: 1) Get more and better data. 2) When adapting to surroundings, take precautions to reduce disaster risk. 3) Find new financial instruments or innovations to spread risks among investors.
Step 7: Invest where the potential returns are highest relative to the risks. Even though stock markets have plunged due to panic, they may not be the most profitable place to put your money in the future. The worst mispricing of assets will almost certainly be in the real estate market, so that's where you may find some of the best bargains. Detroit might turn into a mecca for artists, where $9,000 buys you a house in a neighbourhood that may rebound and thrive. You just have to have the courage to look at the disaster data and act.
ahead_of_the_curve  crisis  dark_side  de-risking  defensive_tactics  disasters  Doug_Steiner  extreme_weather_events  financial_instruments  financial_innovation  first_movers  hacks  historical_data  information_sources  instrumentation_monitoring  investing  lessons_learned  measurements  mispricing  next_play  precaution  risk-sharing  rules_of_the_game  smart_people  thinking_tragically  tips  worst-case 
february 2009 by jerryking

Copy this bookmark:





to read