This book introduces a new set of practical principles for eliminating and reducing risk in any kind of system, whether financial or non financial and including engineering, computer and business systems -- and even military systems.
Although these new principle have come from research into risk in engineering and computer systems, surprisingly, they also resolve an old dispute in the investment arena, between the academic theorists who use the beta measure of risk and the followers of the ideas of the late Benjamin Graham, and his famous disciple, Warren Buffett. Each side is well known for castigating the theories and ideas of the other, with seemingly little common ground.
The new risk principles, and principles for eliminating risk, show clearly that both sides in this famous dispute are right, for the new principles bridge the gap between the two. They show that the beta-theory proponents simply had failed to develop their theory far enough -- their risk measure in particular -- to include risk elimination possibilities.
At the heart of the new theory of risk in systems are two ideas: first, the idea of extending the risk measure to include average system output loss with respect to the best-case system output, and second, the idea of eliminating those output losses with respect to the best case, thus preserving the benefit of running the risk.
The author presents the new principles along with many practical and numerical examples, and the essential ideas are clearly explained. Nevertheless, if you examine the material closely, you will find that it will withstand a rigorous analysis.
There are some elementary mathematical relationships in the book, but because their meaning is also well explained in words, and reinforced by practical examples, these can often be skipped. The intent is to enable you to grasp the ideas and concepts well enough to enable you to put them to practical use, in whatever your field of endeavor, anything from spacecraft engineering, to computer systems design, to investment management.
This book is an often-requested reprint of two classic texts by H. Haken: "Synergetics. An Introduction" and "Advanced Synergetics". Synergetics, an interdisciplinary research program initiated by H. Haken in 1969, deals with the systematic and methodological approach to the rapidly growing field of complexity. Going well beyond qualitative analogies between complex systems in fields as diverse as physics, chemistry, biology, sociology and economics, Synergetics uses tools from theoretical physics and mathematics to construct an unifying framework within which quantitative descriptions of complex, self-organizing systems can be made. This may well explain the timelessness of H. Haken's original texts on this topic, which are now recognized as landmarks in the field of complex systems. They provide both the beginning graduate student and the seasoned researcher with solid knowledge of the basic concepts and mathematical tools. Moreover, they admirably convey the spirit of the pioneering work by the founder of Synergetics through the essential applications contained herein that have lost nothing of their paradigmatic character since they were conceived.