The changing nature of risk and risk management: the challenge of borders, uncertainty and resilience

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Competing biosecurity and risk rationalities in the Chittagong poultry commodity chain, Bangladesh

This paper anthropologically explores how key actors in the Chittagong live bird trading network perceive biosecurity and risk in relation to avian influenza between production sites, market maker scenes and outlets. They pay attention to the past and the present, rather than the future, downplaying the need for strict risk management, as outbreaks have not been reported frequently for a number of years. This is analysed as ‘temporalities of risk perception regarding biosecurity’, through Black Swan theory, the idea that unexpected events with major effects are often inappropriately rationalized (Taleb in The Black Swan. The impact of the highly improbable, Random House, New York, 2007). This incorporates a sociocultural perspective on risk, emphasizing the contexts in which risk is understood, lived, embodied and experienced. Their risk calculation is explained in terms of social consent, practical intelligibility and convergence of constraints and motivation. The pragmatic and practical orientation towards risk stands in contrast to how risk is calculated in the avian influenza preparedness paradigm. It is argued that disease risk on the ground has become a normalized part of everyday business, as implied in Black Swan theory. Risk which is calculated retrospectively is unlikely to encourage investment in biosecurity and, thereby, points to the danger of unpredictable outlier events

Detecting failure of climate predictions

The practical consequences of climate change challenge society to formulate responses that are more suited to achieving long-term objectives, even if those responses have to be made in the face of uncertainty. Such a decision-analytic focus uses the products of climate science as probabilistic predictions about the effects of management policies. Here we present methods to detect when climate predictions are failing to capture the system dynamics. For a single model, we measure goodness of fit based on the empirical distribution function, and define failure when the distribution of observed values significantly diverges from the modelled distribution. For a set of models, the same statistic can be used to provide relative weights for the individual models, and we define failure when there is no linear weighting of the ensemble models that produces a satisfactory match to the observations. Early detection of failure of a set of predictions is important for improving model predictions and the decisions based on them. We show that these methods would have detected a range shift in northern pintail 20 years before it was actually discovered, and are increasingly giving more weight to those climate models that forecast a September ice-free Arctic by 2055

Routes for breaching and protecting genetic privacy

We are entering the era of ubiquitous genetic information for research, clinical care, and personal curiosity. Sharing these datasets is vital for rapid progress in understanding the genetic basis of human diseases. However, one growing concern is the ability to protect the genetic privacy of the data originators. Here, we technically map threats to genetic privacy and discuss potential mitigation strategies for privacy-preserving dissemination of genetic data.Comment: Draft for comment

Entrepreneurs, Chance, and the Deterministic Concentration of Wealth

In many economies, wealth is strikingly concentrated. Entrepreneurs–individuals with ownership in for-profit enterprises–comprise a large portion of the wealthiest individuals, and their behavior may help explain patterns in the national distribution of wealth. Entrepreneurs are less diversified and more heavily invested in their own companies than is commonly assumed in economic models. We present an intentionally simplified individual-based model of wealth generation among entrepreneurs to assess the role of chance and determinism in the distribution of wealth. We demonstrate that chance alone, combined with the deterministic effects of compounding returns, can lead to unlimited concentration of wealth, such that the percentage of all wealth owned by a few entrepreneurs eventually approaches 100%. Specifically, concentration of wealth results when the rate of return on investment varies by entrepreneur and by time. This result is robust to inclusion of realities such as differing skill among entrepreneurs. The most likely overall growth rate of the economy decreases as businesses become less diverse, suggesting that high concentrations of wealth may adversely affect a country's economic growth. We show that a tax on large inherited fortunes, applied to a small portion of the most fortunate in the population, can efficiently arrest the concentration of wealth at intermediate levels

Ethical principles in machine learning and artificial intelligence: cases from the field and possible ways forward

Decision-making on numerous aspects of our daily lives is being outsourced to machine-learning algorithms and artificial intelligence (AI), motivated by speed and efficiency in the decision process. Machine learning (ML) approaches - one of the typologies of algorithms underpinning artificial intelligence - are typically developed as black boxes. The implication is that ML code scripts are rarely scrutinised; interpretability is usually sacrificed in favour of usability and effectiveness. Room for improvement in practices associated with programme development have also been flagged along other dimensions, including inter alia fairness, accuracy, accountability, and transparency. In this contribution, the production of guidelines and dedicated documents around these themes is discussed. The following applications of AI-driven decision making are outlined: a) Risk assessment in the criminal justice system, and b) autonomous vehicles, highlighting points of friction across ethical principles. Possible ways forward towards the implementation of governance on AI are finally examined

Refining value-at-risk estimates using a Bayesian Markov-switching GJR-GARCH copula-EVT model

In this paper, we propose a model for forecasting Value-at-Risk (VaR) using a Bayesian Markov-switching GJR-GARCH(1,1) model with skewed Student’s-t innovation, copula functions and extreme value theory. A Bayesian Markov-switching GJR-GARCH(1,1) model that identifies non-constant volatility over time and allows the GARCH parameters to vary over time following a Markov process, is combined with copula functions and EVT to formulate the Bayesian Markov-switching GJR-GARCH(1,1) copula-EVT VaR model, which is then used to forecast the level of risk on financial asset returns. We further propose a new method for threshold selection in EVT analysis, which we term the hybrid method. Empirical and back-testing results show that the proposed VaR models capture VaR reasonably well in periods of calm and in periods of crisis