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Risk Governance Management Specialists

Defining My Terms

Black Swan … The theory was developed by Nassim Nicholas Taleb to explain:

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  • The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.

 

  • The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).

 

  • The psychological biases that blind people, both individually and collectively, to uncertainty and to a rare event's massive role in historical affairs.

 

This is also about where incomplete empirical data leads to the wrong conclusion being drawn.

 

Emergent events … Events that appear as the result of the interaction within a system. The ones often labelled emergent are rarer and often unexpected.

when an entity is observed to have properties its parts do not have on their own, properties or behaviours which emerge only when the parts interact in a wider whole … being more than the sum of its parts

 

Fantasy documents are documents that (1) are rarely tested against reality and (2) draw from a quite unrealistic view or model of the organisation.  The fantasy is that everything will work right first time, that every contingency is known and prepared for (as in the Perfect World Paradigm).

This term is taken from an Articled by Lee Clarke &  Charles Perrow (1996:1041) "Prosaic organizational failure". The Article focuses on the often symbolic nature of organisational planning.

 

Induction fallacy …  Started with Hume: familiarity of evolving knowledge blinds you to the truth … often as a result of incomplete empirical data … for example, when you see only white swans you think that all Swan are white.

 

Utility of Knowledge as described In Corley, K.G and Gioia, D.A. (2011), “Building Theory About  Theory Building: What Constitutes a Theoretical Contribution?”,  Academy of Management Review, Vol.36, No.1, pp.12-32.

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  • Practical utility arises when theory can be directly applied to the problems practising managers and other organizational practitioners face [goes back to Kurt Lewin] … through “the observation of real-life phenomena, not from ‘scholars struggling to find holes in the literature’”…  such a practical problem focus is a good way to develop theory per se. Thus, theory directed at practical importance would focus on prescriptions for structuring and organizing around a phenomenon and less on how science can further delineate or understand the phenomenon.

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  • Scientific utility is perceived as an advance that improves conceptual rigor or the specificity of an idea and/or enhances its potential to be operationalized and tested… Theory can advance science by providing cohesion, efficiency, and structure to our research questions and design… In a very practical sense, good theory helps identify what factors should be studied and how and why they are related.

 

 

 

 

 

 

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Risk Governance Management Specialists