Mitigating Risk of a Derivative Services Disaster

Prophets of gloom seldom get a warm reception. But they can stimulate proactive and positive mitigation of reasonable risks.  The communications industry can learn from other industry’s technology failures and resulting crises and catastrophes, such as two recently caused in financial services and energy production.  As we build architectures to enable new digital services, communications industry leaders are increasingly challenged to balance the need for new competitive speed and traditional operational diligence.  Collaboration helps.

I’ve been thinking about the role of technology management in gloomy scenarios, after witnessing two catastrophic disasters with devastating impacts on society.  The first is the financial crisis, largely caused by enabling--but not managing--the complexity of derivative debt securities.  These financial “mash ups” of multiple securities were largely processed by technology.  There are some fundamental human, non-technical reasons for this crisis, but the lack of monitoring and management controls around these complex assemblies made them appear safely diversified to many, but actually very difficult to track and monitor underlying quality by the issuers.  Most investors didn’t know the true nature of the complexities and interdependencies inherent in the products.  When parts of the industry crashed (mortgages, derivative debt), it almost brought the whole global financial system down, including basic banking liquidity.  The second disaster is the environment and social devastation caused by what is most likely now to be largest crude oil spill the world has ever seen.  Both historical events were caused, in part, by the failure of human engineering around technology, together with lack of reliable management controls for failure scenarios.  These events have destroyed many families way of life.

In the evolving Internet economy, human communications have begun a paradigm shift towards many parties weaving together mashups of apps and services between computing and communications clouds.  Yet, there are none or limited management control standards adopted between service providers to help humans monitor and manage these interdependencies, and the risk of failure they bring.  Will we be next to cause an unforeseen disaster?

My pondering about gloomy scenarios has become another reason I see great potential for the TM Forum’s Service Delivery Framework (SDF).   That potential goes beyond risk mitigation, and includes potential for new revenues too in “sunny day” scenarios, by monetizing service distribution and the value of assurance as a service.  There’s much work to be done.  I want my MTV mashup, but we need to mash it with interoperable management too.  There very well could be much more at stake than just merrily sharing music videos with friends on Facebook.