Hoist by your own robot

The history of warfare is full of stories of people turning their enemies' weapons against them with disastrous results.Today's report from AFP that armed robots could be reprogrammed by terrorists to attack us should come as no surprise.

Prior to an address to the Royal United Services Institute, Sheffield University Professor Noel Sharkey is reported as saying " Military leaders are quite clear that they want autonomous robots as soon as possible, because they are more cost effective and give a risk-free war......The use of such devices by terrorists should be a serious concern."

It seems stating the obvious that if the robots can be turned against you then you do not have risk-free war.

"Terminator" style machines will eventually be developed. Will they make better , more precise decisions than troops on the ground who get confused, angry and scared? Probably. Will we feel safer, more secure, more willing to find a peaceful solution? Probably not.

The unintended consequences of Berwick-on-Tweed

If, as the latest straw poll suggests, the inhabitants of Berwick-on-Tweed were to seek to join Scotland after 500 years of being English then the Scots should think through the unintended consequences for Scotland’s claims to the Shetland Islands. After all these islands were pawned in 1469 by the King of Norway and Denmark for a Scottish loan, so they have only been in Scottish hands 13 years longer than Berwick-on-Tweed has been English. There was a right of redemption in payment of 210 kgs of gold , which seems a rather reasonable sum for the oil rich Norwegians to find for 566 square miles, even at the present price of gold.

The financial attractions for the Shetlanders of joining Norway might be even greater than those enthusing the burghers of Berwick-on-Tweed. They would not only be able to expect amongst the highest living standards in Europe, the end to direct EU interference in their lives, but they could also make off with whatever oil reserves are left in their section of the North Sea.

Downhill Risk

Last week in the Daily Telegraph there was the obituary of a Richard Burton who died on January 6th 2008. Not the one who married Elizabeth Taylor twice, but the one who survived 65% burns in a racing car accident , married five times and employed Sarah Ferguson before she became Duchess of York. As my father would have said "He was quite a boy." He was also the direct descendant of Robert Burton who wrote "The Anatomy of Melancholy." Melancholy does not seem to have been a problem, rather an excess of joie de vivre.

One wonderful snippet went as follows " Burton married often and was a fount of knowledge on the art of making love; for example, he insisted that when doing so on a mountainside it was important to be facing downhill."

In the interest of think risk, smarter decisions I leave it to my readers to think through the possible consequences of Burton's downhill tryst.

Walking away is a decision

Sometimes the best decision is not to get involved further. Bidding at an auction is a good example. You need to be very clear about what your top bid is and when you get there you need to be disciplined to walk away otherwise you get caught up in the desire for the object and the competition with the other bidders. That way lies penury. Saito san, when President of Daishowa Paper paid massively over the odds for his Van Gogh portrait of Doctor Gachet, at the time a world record for any picture, just to show that he could. No wonder the Japanese paper industry has a reputation for over investment and poor returns. They used to get away with it because their major shareholders, the banks, were unable to walk away beacuse they were all bound together with cross shareholdings.



Luqman Arnold of Olivant last week demonstrated how it shold be done when he withdrew from the Northern Rock auction citing the impossibility of meeting the government's critieria and also delivering a satisfactory return for his shareholders. He will have enhanced his reputation as a thoughtful investor .

Embracing diversity

"The underlying struggle is between worlds of plenty and worlds of want; between the modern and the ancient; between those who embrace our teeming, colliding, irksome diversity, whilst still insisting on a set of values that binds us together, and those who would seek, under whatever flag or slogan or sacred text, a certainty and simplification that justifies cruelty towards those not like us."

Blessed be the embracers for they shall take risks.

The quote is from Barack Obama's book " Dreams From My Father".

Retail is detail

A well known clothing retailer offers free delivery for all items when the combined spend online exceeds £30. In the recent sales a customer who bought salegoods online plus other non-sale items was disappointed when he was told several days later that, due to demand, the sales items could not be supplied and irritated extremely when that meant that the combined total of the goods to be delivered was now below £30 and therefore liable to a delivery charge of £3.50.
Eventually the customer's cries of indignation prevailed and the goods were delivered free of charge, but not before their trust in buying online from the retailer had been badly shaken.


Several questions come to mind

* why couldn't the system immediately advise that the sales items were out of stock, thus avoiding all the subsequent problems?
* why couldn't the computer system pick up the anomaly of a customer losing a benefit because of non- availability, so that it could be looked at and if need be, overridden?
* why wasn't this sort of glitch identified when the system was being set up?


Trust on the internet is key for buyers. Lose that trust and the customers not only never come back they will pass the word to others of their poor experience. The downside of online shopping is much bigger than most people imagine.

The Dangers of Change

There is a rather interesting article on the 'Crackunit' blog run by Iain Tait. The short article lightly pokes fun at the current air of security paranoia.
Read the full article here - http://www.crackunit.com/2008/01/28/the-dangers-of-change/

Sign of the times

Are signs good risk management or have they proliferated to such an extent that their impact has been lessened? Would removal of signs assist in some situations and if so what would they be?

Are signs more effective in some cultures than others? It was remarked by British engineers working at my company’s factory in Japan that a sign on the door saying "Danger,Do Not Open" was scrupulously observed by the Japanese, where in the UK it would be seen as a challenge to open.

That said the Japanese engineers at Tokaimura , whose management was criminally negligent when organising the movement of radioactive material, clearly had no training as to the danger and no signs would have helped them, the safety culture was non-existent. It is having a workforce that thinks and discusses about downside risk that creates a good safety culture.

Signs are for strangers, like the one the farmer is taking away. If you know your business in great detail you don't need signs.

In place of a sign, how about reviewing the Tokaimura accident and asking what lessons can be learned? Here it is, culled from various sources.


Tokaimura Accident
On September 30th 1999 the most serious nuclear radiation accident in Japan’s history to date occurred at Tokaimura northeast of Tokyo . The accident occurred at JCO’s plant, a subsidiary of Sumitomo Metal Mining Co.

Wikipedia notes
The direct cause of the criticality accident was workers putting uranyl nitrate solution containing about 16.6 kg of uranium, which exceeded the critical mass, into a precipitation tank. The tank was not designed to dissolve this type of solution and was not configured to prevent eventual criticality. Three workers were exposed to (neutron) radiation doses in excess of allowable limits, and two of these workers died; a further 119 received lesser doses of 1 mSv or greater.[1]
Dozens of emergency workers and nearby residents were hospitalised and hundreds of thousands of others were forced to remain indoors for 24 hours.

The New York Times asked

Why were workers mixing vastly excessive amounts of enriched uranium manually rather than with the plant's sophisticated machines that were meant to insure precise measurements?

Why was no alarm sounded at the fuel enrichment plant after an accident that produced 10,000 to 20,000 times normal radiation levels in the immediate area?

Why was the plant itself not clearly marked as a nuclear production site and equipped with a battery of anti-radiation and security measures, even though it is situated in the midst of a residential area?

The Tokaimura uranium refining plant did not have any markings identifying the site as dangerous, its staff lacked proper protective shields, it had no alarm system, and it had never been equipped with a safety manual.

BBC said Hideki Motoki, operator of the JCO Company, admitted using illegal standards for uranium processing for the past four years. Among several known violations, the firm changed its procedures manual without government approval in order to speed up processing and allowed workers to transport uranium in stainless steel containers similar to buckets instead of relying on high-tech equipment. It has also been reported that the workers never received proper training.

Japan Times. "JCO Chief Admits Workers were Poorly Trained."The head of JCO Co.'s uranium processing plant, Kenzo Koshijima, admitted that the firm had never educated its workers regarding criticality or its effects and that portions of the procedures in a manual were skipped "for the sake of efficiency."

Koshijima explained that his workers used stainless steel buckets to melt highly enriched uranium because using the melting tower--required by standard procedure--left residue that in turn raised questions as to the purity of the end product. He added, "It was also true that doing things manually was more effective in getting the job done at times."

This was a small company where they got lazy despite the extreme danger of what they were handling and they stopped thinking and reinforcing the imperative need to manage the risk and to adhere to the strict standards of the industry.

Internal Hackers

When you ask people to rate the impact on their organisation of an internal hacker, they often say medium to low and when asked about the probability, it is usually low. Yet all the evidence says that when an internal attack occurs the impact, because of the inside knowledge, is in fact high. In the case of Societe Generale where the hacking was internal the impact was very high, but not yet as high as Barings. No wonder organised crime aims to place its own on the inside of financial organisations.

Neanderthals didn't send Christmas cards

The way risk is managed is one measure of a society and its reach. Modern man,with more extended kinship links, had a greater network than the Neanderthals, whose artefacts’ origin indicate a much smaller territorial range. In the event of adverse conditions a strong and widespread network remains a valuable protection against downside risk and ,on the principle of “it’s not what you textmessage it’s who you textmessage” it can be argued that networks provide opportunities for advancement, which is all around managing upside risk.


The City of London is a very advanced and venerable network, arguably the best in the world. It owes some of its success and many of its failings to the old boy element, but some of the newcomers are impressed by the way the physical proximity allows for ideas to be brought to the attention of many key players quickly and for them to be honed through discussion with many different interested parties. Market research is one of the ways to manage upside risk, to reduce the uncertainties in a proposition and the London Market and the network it represents have an edge in this area.

The fact that newcomers are quickly involved into the London Market network strengthens it. It is not a closed shop, it does not try to exclude foreigners, quite the contrary they are key to its purpose. It suffers like any long established network from unnecessary activities and some downright dubious ones. It is protean through constant renewal, not only by accepting new people, but by offering opportunities for people to recycle themselves. Having lived in Japan for 18 years I can say that it can offer far better opportunities than any Japanese network that I know of. It provides individuals with upside risk opportunities to find employment, promote services, create new businesses, solve problems and to take risks.