Daily Archives: May 7, 2020

Leadership Reconceptualized: A Compass for the Leaders of the New Global Era

By Vassili Apostolopoulos – Deconstructing the New Era, is a formidable task. As I am writing these lines, the world has nearly stopped, with more than 180 countries fighting the Coronavirus, imposing different forms of social distancing and lockdown measures. The pandemic of COVID-19 has changed the world in ways and to lengths that we can still not begin to fathom.

Economics, politics, international relations, and governance, on all levels seem to be fundamentally changing. The ways in which firms, governments, international organizations, societies, and even families and individuals operate will change forever. Until a fully-fledged and widely available vaccine alleviates the health risk and contributes to efficiently managing the crisis, social distancing, restrictive measures in work and travel, fear and insecurity, instability and uncertainty will be part of our lives. And, even after the vaccine, the major global effort of preventing the next pandemic, by building a sustainable early warning system with solid safeguards and rapid response mechanisms across the globe and within states and societies will need to become our top priority.

Averting the next Pandemic, is the foremost collective responsibility, for leaders of all fields; from politicians to doctors, from health experts to corporate leaders, from researchers to philanthropists; we all need to contribute to the race for a vaccine, for effective and accessible cures, but also, to develop the action plan which will change the habits and the vicious cycles that generate new viruses. In our interconnected world, where poor hygienic conditions in a wet market in China, can within months bring the world into a standstill, global governance undoubtedly requires an overhaul.

The same applies to dealing with the root causes of infectious diseases such as influenzas, the bird flu, and then the swine flu -the previous pandemic- for which we had been warned a year in advance, in 2008 and had failed to act. More systematic global monitoring, early warning and proactive prevention models, need to be developed on a global level. Crucial institutions like the World Health Organization and the United Nations will need to be revamped, strengthened and upgraded. Shortcomings in global leadership during the COVID-19 pandemic came at a great cost, and a major global crisis was treated very poorly and highly unsystematically in some of its most decisive phases.

Leadership cannot be a la carte, and global cooperation in the face of existential global crises cannot be elective. more>

Updates from McKinsey

Banking models after COVID-19: Taking model-risk management to the next level
The COVID-19 pandemic has revealed unexpected flaws in the business models that banks rely upon. How can they best address this challenge?
By Marie-Paule Laurent, Olivier Plantefève, Maribel Tejada, and Frédéric van Weyenbergh – The COVID-19 pandemic is taking a terrible toll in human life and in the livelihoods of millions the world over. As people and institutions struggle to contain the spread of the virus, the measures necessarily imposed have caused major economic disruptions.

Every industry has been affected, and banking is no exception. Capital, profit-and-loss, and liquidity positions have been hit very hard. One consequence has been that banks’ models have broken down across their business. The flaws have put the reliability of these models in doubt and suggest that they cannot be trusted to help banks navigate through the crisis.

Few business leaders could have foreseen a global economic shutdown of this magnitude. The models that financial institutions depend on to run their businesses simply did not account for such a crisis. Most models are almost by necessity designed to predict a stable future. In truth, the real failure is not that banks used models which failed in this crisis but rather that they did not have fallback plans to manage when the crisis did come.

There are a number of reasons for the failures. First, model assumptions and boundaries defined at the design stage were developed in a pre-COVID-19 world. Second, most models draw on historical data, without the access to high-frequency data that would enable recalibration. Finally, while access to the needed alternative data is theoretically possible, models would not be able to integrate the new information in an agile manner, because the systems and infrastructure on which they are built lack the necessary flexibility.

Banks are experiencing ever more model failures, and further issues can be expected with time. Financial institutions must now urgently review their model strategies. They need to develop and apply both efficient short-term actions and a long-term plan to improve model resilience. Over two prioritized time horizons, banks can carry out coordinated model adjustments to enable business continuity in the short term while reviewing their model development and redevelopment needs and upgrading their model-risk-management (MRM) frameworks over the longer term. more>

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Updates from Ciena

Unleash a full spectrum of submarine network services
What are the benefits and challenges when providing submarine network services based on Spectrum Sharing?

By Brian Lavallée – A while ago, I wrote the “Virtualize Your Submarine Cable” blog looking at the idea of Spectrum Sharing, which logically partitions the available optical spectrum of a submarine optical fiber among multiple different end-users. This solution addresses customers who need more than a few channels (wavelengths) but less that an entire optical fiber, which can be extremely expensive or more often than not, simply unavailable.

End-users can can choose to dip their toe into Spectrum Sharing, by purchasing spectrum but having the cable operator managed their “virtual fiber pair” service, or they can choose to dive right in and manage the spectrum and required Submarine Line Terminal Equipment (SLE) by themselves. There are pros and cons to each approach. If only there was a freely available reference to explain these pros and cons…

Spectrum Sharing offers several benefits to end-users and submarine cable operators alike. For example, submarine cable operators can monetize their submerged assets in a new and interesting way, by selling upgradeable THz, and not fixed Tbps. End-users can leverage rapid, ongoing advancements in coherent modem technology because they can increase the capacity of their purchased optical spectrum partition by installing the latest SLTE, when they need it. This allows end-users to leverage the latest coherent optical technology enabling a continual capacity upgrade to a fixed optical spectrum, and also allows the cost per bit to continually decline, which is a key benefit of each new generation of technology. more>

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Updates from Chicago Booth

Some basic economics of COVID-19 policy
A look at the trade-offs we face in regulating behavior during the pandemic
By Casey B. Mulligan, Kevin M. Murphy, and Robert H. Topel – The costs of the COVID-19 crisis come in two primary forms. The first is the direct impact in terms of health and lives lost. The second is the indirect impact that comes from efforts by individuals, private institutions, and governments to mitigate those health impacts, such as social distancing, stay-at-home orders, and mandatory business closures. It is imperative that we keep in mind that both are costs, and that less of one typically means more of the other. Like it or not, the first lesson of economics is that there are trade-offs, and choices are inevitable.

Regardless of how we choose to bear them, the costs of the pandemic will be large. Some very rough estimates provide perspective. Based on our earlier work on the value of mortality reductions and improved health, we estimate that an unrestricted pandemic infecting 60 percent of the US population and with an infection fatality rate (IFR) below 1 percent would result in roughly 1.4 million deaths, heavily concentrated among the elderly, with a total value of lost lives of about $6 trillion. For comparison, that is equivalent to about 30 percent of annual US GDP, suggesting that even small progress against the spread of the disease can be quite valuable.

Against this, we estimate that efforts to slow the pandemic via a nationwide shutdown of “non-essential” economic activities would carry a cost approaching $7 trillion per year (roughly $20 billion per day), even ignoring other long-run costs from reduced values of human and physical capital and any intrinsic value of reduced civil liberties.

Of course, an unrestricted pandemic is implausible even in the absence of government interventions, as individuals have powerful incentives to engage in self-protection once the risks are even partially known. Even so, these are big numbers. more>

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