BIS Publications Relating to Operational Risk and Resilience

 The BCBS under BIS has always been a core source for operational risk standards for banks and countires whose central banks are members of the BIS. 

The core documents include:

Principles for the Sound Management of Operational Risk

• https://www.bis.org/publications/fsi-summary-principles-sound-management-operational-risk-psmor-executive-summary
• https://www.bis.org/publications/202103-guidelines-revisions-principles-sound-management-operational-risk

Principles for Operational Resilience (2021)

• https://www.bis.org/publications/202103-guidelines-principles-operational-resilience

Sound Practices for Implications of Fintech Developments for Banks and Bank Supervisors (2018)

• https://www.bis.org/publications/201802-practices-sound-practices-implications-fintech-developments-banks-and-bank-supervisors

Regulatory and Supervisory Approaches to Consumer Protection in Digital Financial Services (2019/2020)

Cyber Resilience: Range of Practices (2018) & Revisions on Third-Party Risk

• https://www.bis.org/publications/cyber-resilience-range-practice

The FSB also has a set of cyber resilience guidelines relevant for operational risk and resilience

• https://www.fsb.org/work-of-the-fsb/financial-innovation-and-structural-change/cyber-resilience/

Invalidation and Unverification

There's two kinds of people. Those who make LinkedIn posts claiming that most people confuse Verification and Validation with one another, and those who don't make such posts.

The first kind of people remind us that:

Verification asks "Did we build the thing right?"

Validation asks "Did we build the right thing?"

One method of verification is testing. Many people see testing as a way to show that something, like a software, has no errors. But many seasoned testers (for example Glen Myers in his classic "The Art of Software Testing") say this view is upside down. In testing, the first presumption is that the software has errors, and the purpose of testing is to uncover those errors.

So testing "fails" when it does not find errors. Testing is successful when it does find errors. The more, and them more serious, the better.

So why not take the same view for Verification and Validation? Considering that we really cannot verify full that the product was built right, in the same way that testing cannot guarantee that the software has no errors. Nor can we guarantee that "we built the right thing" but can only find evidence why it was not the right thing"

Verification - start with the assumption that we built the thing wrong somewhere find evidence of this.

Validation - start with the assumption that we built the wrong thing somewhere and finds evidence of this.

Bruce Lee is a Lean Guru

Bruce Lee may well be a lean guru. Consider his most famous teaching:

"Absorb what is useful, reject what is useless, add what is essentially your own" - Bruce Lee

"Absorb what is useful " = learn, from others and from yourself , what is useful, that is, what has value. Know what value means.

"Reject what is useless" = know what is waste, and discard it.

"Add what is your own" = don't just copy TPS (Toyota Production System)..

Scientific Advertising (Claude C Hopkins)

I realised there must be something that the profesison of advertising can teach people who write CVs. After all,  a CV is a marketing tool. So I decided to ask AI which advertising related books are good to read if one wanted to learn the principles of writing memorable copy that would generate sales. Or in the case of a CV, generate an interview. 

The couple of AI's that I poked with this question gave me two sets of books to read. One common book they both recommended to read first is Hopkin's Scientific Advertising.

It was a very stern book. Very opinionated. The author frowns on any attempt at humour in advertising. Advertising must convey information. Advertising must generate sales. Anything else is failure.

There are some very good information in the book, some of which challenges current thinking and so the reader must think about whether they agree with Hopkins or not. Hopkins passed away in 1932, and the book itself was written in 1923. It must reflect some of the thinking at the time. But some principles are timeless. So, even an advertising legend as Ian Ogilvy gives the book his heartiest endorsement.

On interesting point the author made is that no one reads advertising (or resumes) for entertainment. They are looking for information. One thing to keep in mind.

Capitalism

Why does capitalism have such a bad name in some sectors? 

It's simply a legal, economic, and social framework that gives everyone the right to use their own money and resources to make money. 

If people don't have the right to use their money to make money through entrepreneurship, then who has the right to use the people's money to make money?  Why would that other entity have that right? 

If people don't have the right to use their money to make money for themselves, then they are only allowed to use their money to buy goods for themselves? People are only allowed to be consumers and employees.

Capitalism gives people the right, but not the obligation, to use their money to make money for themselves. In a socialist or communist economy, creation of products and services belongs to the government. That government provides those products and services by taxing people. So, in short, the people have no option but to give their money to the government.

In other words:

1. Capitalism - Freedom. You have the right but not the obligation to use your money to make money for yourself.
2. Socialism / Capitalism - Loss of Freedom. You have the obligation to give you money to the government, for the government to decide how to use your money to provide goods and services to whomever they want. This government is the same group of people who mismanage people's money. Why would you trust them to know what's best for your money?