Column: Roger's Soapbox

Pollsters, Ponies And Post-Truths

By: | March 3, 2017 • 3 min read
Roger Crombie is a United Kingdom-based columnist for Risk & Insurance®. He can be reached at [email protected]

Here’s what we know about what lies ahead: nothing. Nothing at all. Events are largely unpredictable far into the future; people much more so at any remove. Earthquakes happen without much warning; life is a minestrone.

To quote George Carlin: “We’re all here on a big rock, zippin’ around a bad star for no good reason. We don’t know where we came from, we don’t know where we’re going, we don’t know how long it’s gonna last, and we have to keep going to the bathroom. And on top of that, the whole thing is completely meaningless.”

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Despite which, forecasting is a basic requirement of any business — and in four industries that come immediately to mind, it’s the entire business.

What do the pollsters do wrong that insurance does right?

Weather forecasting is the weakest one. The bouncy weather girl hasn’t been selected for her brains or inside knowledge, because, generally speaking, she has neither.

Polling is another, although its reputation lies in ruin following a recent stunning series of wrong forecasts. Brexit. The British economy post-Brexit. Trump. Events have proven beyond the forecasting abilities of pollsters and economists, for that matter. The dismal science indeed.

Bookmaking fares better — not the art of printing and binding, but the science of knowing which horse or team will win the race or the game (Trump foxed even those guys). The “bookies” (or the OTB or what have you) make a solid living forecasting the outcome of complex events.

So do insurers. What is insurance if not the ability to accurately forecast life spans and accident probabilities?

Which begs the question: What do the pollsters do wrong that insurance does right? Easy enough to discern. It’s the clause in every insurance contract that says that if you lied on your application in any meaningful way, the policy is invalid. Simple.

Pollsters must rely on the answers they are given. Many of them phrase their questions to derive desired answers. I know this to be true, because I been politically polled. What was wanted was not the truth, but confirmation of the pollsters’ biases.

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Insurers want the truth, the whole truth and, quite literally, nothing but the truth. Not the post-truth or the alternative truth. A smoker who claims to abstain is warping beyond repair the forecasts on which premiums are based. The citizen who says she intends to vote Clinton, because she is embarrassed to admit to liking Trump, can lie with impunity. Many of them did, apparently.

Horse racing, football and all sports on which wagers are laid also rely on the integrity of the players, the officials and the supervising bodies. That’s why a drugged athlete offends our sense of fair play. Without that, all bets are off.

My truth may differ from yours, but the smart forecasting industries dial that out of the equation. That’s why insurance companies have billions and why there are at least two legalized betting shops on every high street in Britain.

Martin Luther King put it best: Peace if possible, truth at all costs. &

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

Cyber Threat Will Get More Difficult

Companies should focus on response, resiliency and recovery when it comes to cyber risks.
By: | April 19, 2017 • 2 min read
Topics: Cyber Risks | RIMS

“The sky is not falling” when it comes to cyber security, but the threat is a growing challenge for companies.

“I am not a cyber apocalyptic kind of guy,” said Gen. Michael Hayden, former head of the Central Intelligence Agency and National Security Agency, who currently is a principal at the Chertoff Group, a security consultancy.

Gen. Michael Hayden, former head of the CIA and NSA, and principal, The Chertoff Group

“There are lots of things to worry about in the cyber domain and you don’t have to be apocalyptic to be concerned,” said Hayden prior to his presentation at a Global Risk Forum sponsored by Lockton on Sunday afternoon on the geopolitical threats facing the United States.

“We have only begun to consider the threat as it currently exists in the cyber domain.”

Hayden said cyber risk is equal to the threat times your vulnerability to the threat, times the consequences of a successful attack.

At present, companies are focusing on the vulnerability aspect, and responding by building “high walls and deep moats” to keep attackers out, he said. If you do that successfully, it will prevent 80 percent of the attackers.

“It’s all about making yourself a tougher target than the next like target,” he said.

But that still leaves 20 percent vulnerability, so companies need to focus on the consequences: It’s about response, resiliency and recovery, he said.

The range of attackers is vast, including nations that have used cyber attacks to disrupt Sony (the North Koreans angry about a movie), the Sands Casino (Iranians angry about the owner’s comments about their country), and U.S. banks (Iranians seeking to disrupt iconic U.S. institutions after the Stuxnet attack on their nuclear program), he said.

“You don’t have to offend anybody to be a target,” he said. “It may be enough to be iconic.”

The world order that has existed for the past 75 years “is melting away” and the world is less stable.

And no matter how much private companies do, it may not be enough.

“The big questions in cyber now are law and policy,” Hayden said. “We have not yet decided as a people what we want or will allow our government to do to keep us safe in the cyber domain.”

The U.S. government defends the country’s land, sea and air, but when it comes to cyber, defenses have been mostly left to private enterprises, he said.

“I don’t know that we have quite decided the balance between the government’s role and the private sector’s role,” he said.

As for the government’s role in the geopolitical challenges facing it, Hayden said he has seen times that were more dangerous, but never more complicated.

The world order that has existed for the past 75 years “is melting away” and the world is less stable, he said.

Nations such as North Korea, Iran, Russia and Pakistan are “ambitious, brittle and nuclear.” The Islamic world is in a clash between secular and religious governance, and China, which he said is “competitive and occasionally confrontational” is facing its own demographic and economic challenges.

“It’s going to be a tough century,” Hayden said.

Anne Freedman is managing editor of Risk & Insurance. She can be reached at [email protected]