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Directors Roundtable: Key Issues for Boards of Directors Opportunities and Challenges in Cybertech, October 1st, 2013

CYBORG COMMERCE:

Corporate Risk Governance and Liability On The Wild Frontier

David K.A. Mordecai RiskEcon® Lab for Decision Metrics @ NYU

Compass Lexecon and Risk Economics, Inc.

The Good, the Bad, and the Ugly

• Good = Viable Opportunities and Prospective Resources/Competencies

• Bad = Inherent Threats and Potential (Latent) Vulnerabilities

• Ugly = Complexity, Uncertainty and “Unknown Unknowns” – The Wild Frontier: Rules are yet to be written

© 2013 Risk Economics, Inc. 2

Strategic Interaction and Self-Organized Criticality • Dynamic Complexity of Market Externalities

and Industry Contestability • System Fragility


An example of dynamic "network fragility" Another example of a complex interconnected network (in this case a hashtag community)

Cybersecurity and Corporate Espionage (More Broadly Defined)


Commercial Demography and Tacit Collusion • Network Externalities and Coalitions


An example of dynamic "network fragility" Another example of a complex interconnected network (in this case a hashtag community)

Differential Privacy and Unjust Enrichment

• Utility, Disutility, and Equitable Consideration vs Co-Products – Rights and Expectations of Privacy – Goods/Services and the By-Products


Warehousing/Mining Data and Forseeability

• Corporate Liability and Accountability from

– Passive Collection and Mining of Data – Provision of services (reliance and suitability)


© 2013 Risk Economics, Inc.

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Liability Rules and Damages • Expectations from Diverse Constituencies (Not

Just Shareholders) – Caught Between a Rock and a Hard Place with

Cross-Fire From All Sides


External and Internal Threats from “Fraud Risk” (whose fraud?)


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Social Media Risk at the Water Cooler


Outsourcing: Crowdsourcing and Cloud Services Whose IP is it Anyway?


Product Liability and Contagion within the Ecommerce Value Chain


RiskEcon® Lab and its Affiliates • RiskEcon® Lab: In order to facilitate the development of software as a service, analytics tools, and

semantic libraries that employ high-dimensional datasets to integrate conventional data with web-enabled demographic, biometric, psychometric and socio-metric data from innovative sources, Risk Economics has established the Risk Economics® Lab for Decision Metrics at New York University’s Courant Institute. The Courant Institute for Mathematical Sciences is an independent division of NYU, widely considered one of the world’s leading mathematics educational and scientific research centers, and ranked first in applied mathematical research. The RiskEcon® Lab applies a range of computational methods to analyze consumer and population-related societal trends. Recent events demonstrate that many large-scale geopolitical and socioeconomic questions are particularly related to the implications and effects of interrelated changes in demographics, technology adoption, and lifestyle choices on the economy. Understanding these patterns is crucial for decision-making in both industry and government. The most critical are the emerging effects of changes in technology and consumer behavior on finance, labor, and housing, and on trends in income and wealth distribution, immigration, aging, health and the environment.

• CEcADA: Computational Economics and Algorithmic Data Analytics ("CEcADA") is the RiskEcon® Lab’s affiliated outreach initiative for the arrangement and coordination of public-private-academic-NGO interdisciplinary research initiatives focused upon collaborative academic entrepreneurship applied to societally-scaled solutions for real world systemic issues. CEcADA collaborative outreach activities are being led by David K.A. Mordecai and Samantha Kappagoda, Co-Executive Directors of the initiative, and are being coordinated out of the office of NYU’s Senior Vice-Provost for Research, the former global head of IBM Research. The Director of the CEcADA initiative is the former CTO of both Reuters and Capital One.


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http://www.math.nyu.edu/



RiskEcon® Lab and its Affiliates (cont.) • Risk Economics, Inc.: Risk Economics® is a New York City based advisory firm,

specializing in the application of computational economics to the proprietary development and scalable implementation of robust modeling and data analytic frameworks for valuation, strategic and systemic risk analysis, and dynamic asset-liability management.

• Compass Lexecon (www.compasslexecon.com): Compass Lexecon (CL) is one of the world’s leading economic consulting firms, and provides law firms, corporations and government clients with clear analysis of complex issues. CL has been involved in a broad spectrum of matters related to economics and finance, providing critical insight in legal and regulatory proceedings, strategic decisions and public policy debates. CL’s experience and expertise apply to virtually any question of economics, in almost any context of the law or business. Compass Lexecon is a wholly owned subsidiary of FTI Consulting, Inc., a New York Stock Exchange traded global business advisory firm.

• Numerati™: Numerati is a private-sector based platform being established to sponsor and promote coordinated incubation/acceleration of computational/digital/statistical forensic applications to fintech and allied risk analytics ventures (e.g. within wholesale commercial specialty, supplemental and surplus financial lines and casualty insurance) via syndicated consortium investments.


David K.A. Mordecai Risk Economics, Inc.

www.riskecon.com


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