As I write, the financial systems of the world are collapsing with still no clear indication of what the consequences will be and which measures should be taken to avoid such a crisis in the future. There seems to be agreement though, that the financial instruments introduced in the past few decades entailed far too much complexity and uncertainty and that there was too little regulatory control over the use of these instruments. Management of uncertainty with the aim of achieving self-control is the core concern of this book. It was not written with a focus on financial systems, but many concepts developed in this book are applicable to this field as well. The - neric principles of reducing, maintaining or increasing uncertainties in view of the different contingencies an organization is faced with, the fundamental issue of how much control is possible and who should be in control, and the question of how much and what kind of regulation is necessary with the overall aim of finding an appropriate balance between system stability and flexibility are at the centre of heated debates on the future of finance.
The handling of uncertainties stemming from internal processes and the environment is a core issue in organizational and system design. Management of Uncertainty examines the necessity of living with technical and organizational uncertainties, or even taking advantage of them without losing the stability created by reducing uncertainty. With overall uncertainty increasing as a result of faster innovation cycles, more dynamic environments, and growing interconnections in organizational networks, socio-technical systems have to continuously adjust the balance between stability and flexibility in order to secure successful performance.
Building on concepts from organization theory, control theory, decision theory, and work and organizational psychology, a decision process is proposed that supports systematic evaluation of the costs and benefits of reducing, maintaining, or increasing uncertainty in a particular context. Also, the individual and collective belief systems that influence cost-benefit perceptions are considered. Consequences for the design of automation, planning systems, organizational rulebooks, safety management systems and also human resource management are drawn.
Management of Uncertainty will be a useful tool for postgraduate researchers, as well as for operational and strategic decision-makers in organizations. It offers a number of concrete instruments for organizational and system design, which are further illustrated by a range of case studies.
The Decision Engineering series focuses on the foundations and applications of tools and techniques related to decision engineering, and identifies their relevance in 'engineering' decisions. The series provides an aid to practising professionals and applied researchers in the development of tools for informed operational and business decision making, within industry, by utilising distributed organisational knowledge.
