Gunilla Sundström - Governance and Control of Financial Systems

GOVERNANCE AND CONTROL OF FINANCIAL SYSTEMS

Ashgate Studies in Resilience Engineering

Series Editors

Professor Erik Hollnagel, Institute of Public Health,
University of Southern Denmark, Denmark

Sidney Dekker, Professor and Director, Key Centre for Ethics, Law, Justice
and Governance, Griffith University, Brisbane, Australia

Christopher P. Nemeth, PhD, CHFP, Principal Scientist and Group Leader,
Cognitive Systems Engineering, Klein Associates Division (KAD)
of Applied Research Associates (ARA), Dayton, Ohio, USA

Dr Yushi Fujita, Technova, Inc., Japan

Resilience engineering has become a recognized alternative to traditional approaches to safety management. Whereas these have focused on risks and failures as the result of a degradation of normal performance, resilience engineering sees failures and successes as two sides of the same coin as different outcomes of how people and organizations cope with a complex, underspecified and therefore partly unpredictable environment.

Normal performance requires people and organizations at all times to adjust their activities to meet the current conditions of the workplace, by trading-off efficiency and thoroughness and by making sacrificing decisions. But because information, resources and time are always finite such adjustments will be approximate and consequently performance is variable. Under normal conditions this is of little consequence, but every now and then and sometimes with a disturbing regularity the performance variability may combine in unexpected ways and give rise to unwanted outcomes.

The Ashgate Studies in Resilience Engineering series promulgates new methods, principles and experiences that can complement established safety management approaches. It provides invaluable insights and guidance for practitioners and researchers alike in all safety-critical domains. While the Studies pertain to all complex systems they are of particular interest to high-hazard sectors such as aviation, ground transportation, the military, energy production and distribution, and healthcare.

A Resilience Engineering Perspective

Edited by

GUNILLA SUNDSTRM
Deutsche Bank, Germany

ERIK HOLLNAGEL
Institute of Public Health, University of Southern Denmark, Denmark

ASHGATE

Gunilla Sundstrm and Erik Hollnagel 2011

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher.

Gunilla Sundstrm and Erik Hollnagel have asserted their rights under the Copyright, Designs and Patents Act, 1988, to be identified as the editors of this work.

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British Library Cataloguing in Publication Data

Sundstrm, Gunilla.
Governance and control of financial systems : a resilience
engineering perspective. -- (Ashgate studies in resilience engineering)
1. Financial services industry--Management. 2. Financial
risk management--Statistical methods. 3. Financial risk
management--Mathematical models.
I. Title II. Series III. Hollnagel, Erik, 1941
332.1'068-dc22

Library of Congress Cataloging-in-Publication Data
Sundstrm, Gunilla.

Governance and control of financial systems : a resilience engineering perspective / by Gunilla Sundstrm and Erik Hollnagel.

p. cm. -- (Ashgate studies in resilience engineering)

Includes bibliographical references and index.
ISBN 978-1-4094-2966-1 (hardback) -- ISBN 978-1-4094-2967-8

(ebook) 1. Financial services industry--Management. 2.
Financial services industry--Law and legislation. 3. Financial crises. I.
Hollnagel, Erik, 1941- II. Title.

HG173.S837 2011

332.1--dc23

2011018523

ISBN: 978-1-4094-2966-1 (hbk)
ISBN: 978-1-4094-2967-8 (ebk)
ISBN: 978-1-4094-8679-4 (ebk-ePUB)

Printed and bound in Great Britain by MPG Books Group, UK

Gunilla Sundstrm and Erik Hollnagel

Gunilla Sundstrm and Erik Hollnagel

Gunilla Sundstrm and Erik Hollnagel

Gunilla Sundstrm and Erik Hollnagel

Bill McKelvey and Rossitsa Yalamova

Erik Hollnagel and Gunilla Sundstrm

Bill McKelvey and Rossitsa Yalamova

Jeff Satinover and Didier Sornette

Rossitsa Yalamova and Bill McKelvey

Erik Hollnagel and Gunilla Sundstrm

Gudela Grote

Bill McKelvey and Rossitsa Yalamova

Gunilla Sundstrm and Erik Hollnagel

Figures

Tables

Gudela Grote is Professor of Work and Organisational Psychology in the Department of Management, Technology, and Economics at the ETH Zurich. She holds a Masters degree in psychology from the Technical University in Berlin and a PhD in Industrial/Organisational Psychology from the Georgia Institute of Technology, Atlanta. She has published widely on the interplay of organisation and technology, safety management, and changing employment relationships. Gudela Grote is Associate Editor of the journal Safety Science. Special interests in her research are the increasing flexibility and virtuality of work and their consequences for the individual and organisational management of uncertainty.

Erik Hollnagel is Professor at the University of Southern Denmark, Professor and Industrial Safety Chair at MINES ParisTech (France), and Visiting Professor at the Norwegian University of Science and Technology (NTNU) in Trondheim (Norway). He has worked at universities, research centres, and industries in several countries and with problems from many domains. His professional interests include industrial safety, resilience engineering, accident investigation, cognitive systems engineering and cognitive ergonomics. He has published widely and is the author/editor of 18 books, including 4 books on resilience engineering. The latest title from Ashgate is Resilience Engineering in Practice: A Guidebook.

Bill McKelvey, PhD MIT 1967. Professor of Strategic Organizing and Complexity Science at the UCLA Anderson School of Management. His book, Organisational Systematics (1982) remains the definitive treatment of organisational taxonomy and evolutionary theory. He chaired the building committee that produced the $110,000,000 Anderson Complex at UCLA opened in 1995. In 1997 he became Director of the Center for Rescuing Strategy and Organization Science (SOS). From this Center he initiated activities leading to the founding of UCLAs Inter-Departmental Program, Human Complex Systems and Computational Social Science. He has directed over 170 field study teams on six-month projects concerned with strategic and organisational improvements to client firms. Co-edited Variations in Organisation Science (with J. Baum, 1999), a special issue of Emergence (with S. Maguire, 1999), and a special issue of J. Information Technology