New Causation Paper

Julia set

The website reported last week on a paper that addresses a enigmatic issue around downward causation.   The enigma is where a higher organized state of an organism or organization can cause changes at the lower levels that make up the upper level.   However, the argument that the higher level is temporary since it exists due the behavior of the lower levels, which appears contradictory.  This problem relates to complexity models, where there is evident self-similarity as you zoom in on the details.

This is almost a which came first, the chicken or the egg?

When creating your ERM models,  you can use either a top-down or a bottom-up design.  The best models address both of directions of design.

Bottom-up design is where you assess all of the known risks and controls.  Then you design your ERM program by prioritizing that list and create your models.

Top-down is where you determine what is needed for strategic planning and decision making.  For instance, you look to solve problems and set up controls at the corporate level.  In this situation you look at controlling management and financial risks.  Also, top-down design places a high priority on the modeling and the efficient use of the company’s capital.  Top-down usually leads to greater understanding and controls, but it is difficult to create buy-in from the divisions and subsidiaries.

Bottom-up design requires risk assessments at the lower levels and are more costly.  The summary of these assessments usually lead to some surprises to upper management, but ERM buy-in is natural.

Take a look at the Downward Causation article for more details on course-graining and natural systems.  Enjoy!

One Reply to “New Causation Paper”

  1. I’ll note that there is not in general a way of telling whether top-down approaches or bottom-up approaches to modeling are going to be more effective at describing a system. This relates to the intractability of finding the optimal compression scheme for a data set.

    That said, specific instances of this problem can be solvable and various forms of information about the nature of a particular problem may help in estimation of a more effective approach. This downward causation puzzle relates more to a question of why and how does the universe furnish us a wide variety of situations where different approaches are effective when we think there is a single underlying model which surely has its own most efficient description? This is a cosmological problem and if the answer is determined by selection effects such as the anthropic principle, definitive answers may not be able to be derived from studying the underlying model and assuming that our universe does not have any apparent violations of Occam’s razor.

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