Complex Decision-Making in Economy and Finance

18Managing Crises in Finance and Other Domains

How can we approach the phenomena and uncertainties related to financial events? We have previously seen that in any field of economic life, extraordinary events do not follow conventional statistical laws. In particular, that their frequency of occurrence and also their amplitude are much higher than those observed in physical phenomena. There are two main reasons for this situation:

• – the evolution of the specialization of today’s companies and the resulting extensive differentiation of their market positions, with all the impacts that this has on the financial and risk environment;
• – the interactions that exist between all components of the economic world and that make each unexpected event unpredictable and have a significant impact in related areas.

How then can we complete the modeling of phenomena and uncertainties related to financial events and draw approaches for the implementation of solutions?

18.1. Reorienting company aims

Two phenomena, experienced, have contributed to the change of context. Without going into very detailed theoretical and mathematical conditions, they are linked to the economic evolution of the world around us and to the changes in the attitude of the financial world towards the industrial world. They simply explain the above assertions and the profound changes in our society.

18.1.1. The growing importance of the shareholder

June 1989, Office of the CEO of IBM Corp. President Lou Gestner decided ...