The Four Principles Of Wikinomics
TRANSPARENCY: The seeds of the current financial meltdown were sewn by
an unwillingness of the banks and investment banks (Banks), as well as
sophisticated investors, to share their data and their expertise in modeling
complex credit and structured finance securities (e.g., mortgage backed and
asset backed securities). Banks were responsible for packaging and selling
trillions of dollars of securities to investors using proprietary data and pricing
models in an endless stream of individually structured securities which were
opaque, in risk terms, within months, if not days of their launch.
The inscrutability of these instruments made them impossible to value and risk
assess without access to timely data and to the Bank’s models, the quality of
which varied widely from issue to issue and from Bank to Bank. With the
inception of the sub-prime crisis in 2007, these factors resulted in investors’
wholesale abandonment of the structured finance securities market and the
paper issued, first by structured investment and other vehicles that held these
securities, and ultimately the Banks themselves. Few would argue that the root
cause of the credit crunch was the pervasive lack of transparency that made
most structured finance securities impossible to value and assess and which
has undermined confidence in the credit worthiness of the storied Banks that
hold these assets. The WRAP is dedicated to radically overhauling the
transparency of the credit securities markets for the benefit of all participants by
enlisting the wisdom of the crowd to value and risk assess existing and new
securities.
TRANSPARENCY: The seeds of the current financial meltdown were sewn by
an unwillingness of the banks and investment banks (Banks), as well as
sophisticated investors, to share their data and their expertise in modeling
complex credit and structured finance securities (e.g., mortgage backed and
asset backed securities). Banks were responsible for packaging and selling
trillions of dollars of securities to investors using proprietary data and pricing
models in an endless stream of individually structured securities which were
opaque, in risk terms, within months, if not days of their launch.
The inscrutability of these instruments made them impossible to value and risk
assess without access to timely data and to the Bank’s models, the quality of
which varied widely from issue to issue and from Bank to Bank. With the
inception of the sub-prime crisis in 2007, these factors resulted in investors’
wholesale abandonment of the structured finance securities market and the
paper issued, first by structured investment and other vehicles that held these
securities, and ultimately the Banks themselves. Few would argue that the root
cause of the credit crunch was the pervasive lack of transparency that made
most structured finance securities impossible to value and assess and which
has undermined confidence in the credit worthiness of the storied Banks that
hold these assets. The WRAP is dedicated to radically overhauling the
transparency of the credit securities markets for the benefit of all participants by
enlisting the wisdom of the crowd to value and risk assess existing and new
securities.
PEERING: With Web 2.0: technologies, transparency can go far
beyond the simple sharing of data. Risk Management 2.0 participants
through a Service Oriented Architecture (SOA) can build on the example
of Linux and other open-source systems to share models,
methodologies and other IP. With access to the data, multiple
organizations can collaborate on creating more credible models for
calculating value, volatility and VaR within the Wiki.
SHARING INTELLECTUAL PROPERTY: Hoarding intellectual property
profited a select few until miscalculations on Wall Street caused the
credit system to implode —negatively affecting everyone. As taxpayers
bail out the financial system and their understanding of what created this
crisis deepens more are demanding that the IP behind this implosion be
exposed and vetted to prevent this from re-occurring. Former Intel
chairman Andy Grove has called upon open-source rules for finding
advanced technology to solve the energy crisis. We believe that they
must also be used to contain the spreading financial crisis.
ACTING GLOBALLY: The credit problem is clearly a global one and
localized actions in one country have proved ineffective in preventing
the contagion from spreading. Risk mis-management is having an
increasingly deleterious effect on the world’s wallet and as such, it is
becoming everyone’s concern. It’s time to align responsibility with
accountability. A rising tide of cooperation is the only option left, leaving
these now discredited secretive, opaque financial algorithms naked to
the wisdom of the crowd.
beyond the simple sharing of data. Risk Management 2.0 participants
through a Service Oriented Architecture (SOA) can build on the example
of Linux and other open-source systems to share models,
methodologies and other IP. With access to the data, multiple
organizations can collaborate on creating more credible models for
calculating value, volatility and VaR within the Wiki.
SHARING INTELLECTUAL PROPERTY: Hoarding intellectual property
profited a select few until miscalculations on Wall Street caused the
credit system to implode —negatively affecting everyone. As taxpayers
bail out the financial system and their understanding of what created this
crisis deepens more are demanding that the IP behind this implosion be
exposed and vetted to prevent this from re-occurring. Former Intel
chairman Andy Grove has called upon open-source rules for finding
advanced technology to solve the energy crisis. We believe that they
must also be used to contain the spreading financial crisis.
ACTING GLOBALLY: The credit problem is clearly a global one and
localized actions in one country have proved ineffective in preventing
the contagion from spreading. Risk mis-management is having an
increasingly deleterious effect on the world’s wallet and as such, it is
becoming everyone’s concern. It’s time to align responsibility with
accountability. A rising tide of cooperation is the only option left, leaving
these now discredited secretive, opaque financial algorithms naked to
the wisdom of the crowd.
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Open Models Company
Wiki Risk Assessment Process 2.0
Wiki Risk Assessment Process 2.0