Twenty Third Floor

Figuring out the future and the now

Category: managing uncertainty

communication, creating value, economics, financial risk, insight, managing uncertainty, market risk, measurement, predictive modelling, remuneration strategies

Make A Million competition encourages financial meltdown

15 October 2008

David Kirk

[There is an additional post for the 2010 competition on how to not lose money in the make a million competition.] The Make a Million competition is in its fourth year. The aim? Take a personal investment of R10,000 and compete with other “investors” to earn the highest return over a short period of a…
Read more: Make A Million competition encourages financial meltdown
currency risk, managing uncertainty, news

Mbeki to resign, no plan, watch the JSE Monday

20 September 2008

David Kirk

Mbeki has responded with the ANC’s request to resign by agreeing. No word as to who will become president in the meantime. Plenty of contitutional issues to address, and from some reports it seems that neither Mbeki nor the ANC fully understand them. No plan, no idea for succession, global markets in turmoil with risk…
Read more: Mbeki to resign, no plan, watch the JSE Monday
financial risk, hedging, investments, managing uncertainty, market risk, news

FSA bans short-selling

18 September 2008

David Kirk

The Financial Services Authority (FSA) announced that it will ban short-selling of publicly listed stocks until January 16th, 2009 for the UK market where it is the financial regulator. It will then be reviewed. From The Financial Times: Hector Sants, chief executive of the FSA, said: “While we still regard short-selling as a legitimate investment…
Read more: FSA bans short-selling
business tools, credit risk, financial risk, managing uncertainty, measurement, news, predictive modelling, statistics

Country Foods, mushrooms and still not the Z

16 September 2008

David Kirk

Would you lend money to Country Foods Limited? According to the Z score perhaps you should have participated in the listing in October 2007. Based on their prospectus and audited financial results for the year to September 2007, their Z-score was high within the grey zone, within reach of the coveted “safe zone”. As recently…
Read more: Country Foods, mushrooms and still not the Z
financial risk, investments, managing uncertainty, market risk, news, optimisation

Mark up a new one for the back-testing books

15 September 2008

David Kirk

Back-testing proponents proudly show the empirical base of their approach. No parametric fitting or theoretical assumptions here. “We use the actual history of the markets to assess our risk and define our strategies.” However, the debate that typically comes up is: Back-testing over which period? Do we include the dotcom bubble and burst? What about…
Read more: Mark up a new one for the back-testing books
business tools, creating value, credit risk, data analysis, economics, financial risk, managing uncertainty, market risk, measurement, modelling, operational risk, optimisation, predictive modelling, regression, remuneration strategies, statistics

Don’t use Altman’s Z-score for managing a turnaround

25 August 2008

David Kirk

I attended workshop presented by the famous credit analyst and model builder, Professor Edward Altman. He is probably most famous for the invention of the seemingly immortal Z score, which is still in use 40 years after its creation in 1968. During the workshop, Professor Altman recounted a story about how a company managed themselves…
Read more: Don’t use Altman’s Z-score for managing a turnaround
data analysis, managing uncertainty, measurement, operational risk, statistics

Fraud and statistics

25 August 2008

David Kirk

Like most power tools, statistics can be dangerous if left in the hands of the ill-trained or inebriated. Unlike rotary saws and industrial angle grinders, when you abuse statistics you don’t damage the tool but you do damage the result. Fraud statistics This is a general observation, but I was reminded of it recently when…
Read more: Fraud and statistics
data analysis, economics, financial risk, managing uncertainty, market risk, measurement, news, operational risk, property, statistics

Pass me that nail would you

7 August 2008

David Kirk

A frequent comment about why “property prices will keep going up” is that: They aren’t making land any more Building costs keep going up Our population is growing If these points are true, then this would provide a strong force to push property prices up. It still wouldn’t mean property prices couldn’t decline. Citizens still…
Read more: Pass me that nail would you

About David Kirk

Featured Posts

The “Indemnity Trap”: Why Outdated Legal Models are Deferring the Promise of Parametric Insurance
by David Kirk
Parametric insurance is often marketed as the “clean” alternative to traditional risk transfer. The pitch is compelling: if a hurricane hits a specific GPS coordinate… Read more: The “Indemnity Trap”: Why Outdated Legal Models are Deferring the Promise of Parametric Insurance
The Complexities of Comparing SCR Cover Ratios Across Insurers
by David Kirk
In the insurance industry, we often use Solvency Capital Requirement (SCR) cover ratios as a key metric for comparing insurers’ financial strength. While these ratios… Read more: The Complexities of Comparing SCR Cover Ratios Across Insurers
One answer could be pet insurance
by David Kirk
I firmly believe major demographics shifts are going to have massive social, political, economic, financial market and commercial impacts in the coming decades. The balance… Read more: One answer could be pet insurance
A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
by David Kirk
Every failure hits policyholders’ savings or cover, impact their lives and their livelihoods. They destroys shareholder value and decrease confidence in the entire financial sector.… Read more: A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
How and why insurers fail
by David Kirk
I’ve been updating my presentation from 2021 on “How and Why Insurers Fail”. I now estimate the annual failure rate (or at least getting into… Read more: How and why insurers fail
The hidden dangers of opinion shopping and trusting good news.
by David Kirk
I had a recent discussion on the value of getting a second opinion. There’s the old line that “if you want five opinions, ask three… Read more: The hidden dangers of opinion shopping and trusting good news.
40,000
by David Kirk
40,000. That’s the ballpark figure I usually work with as the minimum number of micro insurance policies required for scale. The expenses of running even… Read more: 40,000

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