Bankers' Oath is a Compliment

Since beginning of 2015 the bankers' oath is mandatory for all bankers in Netherlands. However, it doesn’t stop there as in some cases external contractors are also required to declare the oath. Of course this means dealing with a little bit of ceremony and paperwork to get the oath official. Traditionally small businesses and independent professionals don’t get too exited about doing "extra" paperwork. In this case there is a little bit more to it.

If you are asked to declare or swear the oath it means your work is considered to be of impact on the risk profile of the bank or that you deal with clients of the bank directly. (Be sure to check the Dutch law for an exact definition.) This can be translated as: the work you do is important for the bank. In this light the oath can be seen as a complement. Continue reading

Debt Ridden Europe 1920

In 1920 John Maynard Keynes wrote 'The Economic Consequences of the Peace' as a critique of the Paris Treaty which outlined the repayment plan for the damages done by the Axis during the First World War. Keynes pointed out that the damage claims were largely excessive and would bankrupt Germany within short order. Nevertheless debt ridden Europe looked to Germany for capital to rebuild their economies. The consequence was the inevitable collapse of the Reichsmark which drew the Weimar Republic in to the abyss with it. Some even argue that the economic collapse, and the consequent large scale poverty, put Germany with its back against the wall giving the Nazi party room to seize Power. Continue reading

Notes on High Reliability Organizations

This article is based on research we did on High Reliability Organizations (HROs) for our Testing and Finance 2012 talk. It intended as a starting point for those interested in learning more about HROs. If nothing else, it provides an extended reference section for further reading and suggests some useful web resources.

What is an HRO?

HROS are organizations that succeed in avoiding catastrophes in an environment where accidents can be expected due to risk factors and the complexity of the system. Consider, for example, the organization behind oilrigs where it is easy to imagine someone getting injured due to a mistake. What starts out as a small mistake may quite literally explode into a big problem. As Tim Harford notes: Continue reading

Square Law of Spreadsheets

Ella places two printouts on John’s desk and points at the total columns. “Why don’t these numbers match?” she asks. John looks for a second, hoping Ella has made a simple mistake. But she’s right, they should match. John spends the rest of the day crawling through dozens of spreadsheets, attempting to find the source of the discrepancy. Eventually the problem is found, but only after turning up five or six similar issues. The team collectively pauses for breath when they consider the number of decisions made on faulty data. It is another week before John has fixed the problems and can return to his original task.

This is a particularly familiar story to many growing financial companies, which often prompts the question “how did things get like this?”. To find the answer, we need to investigate a misunderstood dynamic in spreadsheet and tool development. Consider the following diagram:


Figure 1 – The Square Law of Spreadsheets Effects Diagram. Continue reading

Keynes: The Return of the Master


Skidelsky the author of the monumental trilogy biography on Keynes is back with Keynes The Return of the Master. And his timing couldn’t have been better. In his new book he uses Keynes ideas and theory to analyse the current crisis in what only can be seen as a clear and relevant analysis. Not only does it discuss how we got into this mess, how we could have known it would end as it did, but more importantly what needs to be done to get the economy back on track.

Skidelsky takes the reader on a journey to reinvent economical theory. Last week’s G20 summit in Seoul becomes an interesting thriller once one applies the framework presented by Skidelsky. Do we want a return to a 1944 Bretton Woods style Agreement and fix exchange rates between countries, or should they float. The G20 turned out to be a G2, dollar versus yuan, Barack Obama versus Hu Jintao, US versus China, free market versus controlled markets.

Conclusion, if you haven’t yet pick up this book its a magnificent read!

Web resources

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