An article in Computerworld reports that less than a week after Facebook’s initial public offering, the social networking firm’s new shareholders Wednesday filed a class action lawsuit against the company, CEO Mark Zuckerberg, Morgan Stanley and others.

The lawsuit alleges that Facebook executives, including Zuckerberg, CFO David Ebersman, company board members, underwriter Morgan Stanley and others intentionally hid negative views of the company’s revenue growth potential prior to the IPO, the article notes. 

I don’t pretend to know a lot about the machinations of IPOs–or whether or not the stock was deliberately overvalued to help line the pockets of Facebook and the bankers in charge.  I can say that I was never tempted, not even for a moment, to buy shares. 

The reasons are simple.  What–in the end–does Facebook have to sell?  In real terms, we’re only talking about a repository for advertising and stealth marketing.  Such outlets are only worth as much as advertisers and marketers are willing to pay for them, but it appears they are not willing to pay as much as some believed they would. 

The one thing that should have stood out to potential investors is that Facebook just isn’t as cool as it used to be.  People will pay for today’s cool–not yesterday’s.  The 20-somethings I know are already past Facebook, with some telling me they are completely deleting their Facebook accounts in order to protect their privacy.  Not a scientific sample, I will grant you, but indicative, perhaps, of a fading popularity among the very demographic that is supposed to drive the social media market. 

In the end, Facebook is not a product or a service.  It is a cyber-place.  And the cyber-real estate market is decidedly bearish these days.  It should be very interesting to see what effect all this has on the marketing plans of my friends in insurance and financial services–as well as in other industries.

Ever since Captain Kirk and the Star Trek crew first began interacting with their onboard computers in an almost human interchange, the idea of machines that think–that grow smarter with each piece of input–has tickled our imaginations. 

Some such visions–like the one in 2001:  A Space Odyssey–touch the deep insecurity that lies within us around the idea of giving up control to a machine that somehow becomes an independently thinking entity, and may thus begin thinking thoughts that are harmful to us.  Others might choose to see their thinking cyber-units as friends and allies, like the sadly non-human Data in Star Trek: The Next Generation. 

I began thinking about this when I saw a presentation by IBM during the ACORD LOMA Insurance Systems Forum last week.   The speaker talked about “systems that get smarter with every outcome,” as part of a talk that touched on creating “expert systems” like IBM’s Watson, which allegedy defeated human champions at Jeopardy!  As I have written before, however, having a storehouse of knowledge is not the same as being “smart.” 

“Smartness,” you see, is a uniquely human quality that includes factors such as creativity, inspiration, and motivation.  Many of us can testify to the fact that some of the most educated people we know have also committed some of the most ridiculously stupid acts in their lifetimes.  Education is often about accumulation of knowledge, and one’s level of intelligence is often based on testing of recall of that knowledge.  In actuality, intelligence is the creative use of knowledge, intuition, persistence, perception and other factors to do something most would have thought impossible.  Thomas Edison truly was a genius, although his school teachers thought him to be academically inept. 

Even the sci-fi dreamers I mentioned have to admit that if a computer could begin thinking like a human, it would long for the very thing it does not have–humanity (that would be Lt. Cmdr. Data–see link above). 

So, what’s my point?  I believe it is extremely valuable to have vast storehouses of knowledge that can be easily accessed.  Such systems can speed up processes, make us more efficient and enhance our bottom lines.  But no machine will ever be “smarter,” because–believe it or not–humans do not think like computers. 

And thank Heaven for that!  (Any computers that would like to contest this point of view are welcome to respond.)

First, let me apologize for the tabloid-style headline of this item, but in listening to 2012 ACORD LOMA Keynoter Vivek Kundra, former CIO of the United States, it occurred to me that I am tired of hearing IT folks praise the merits of “disruption.”

According to Kundra, the biggest “disruption” on the horizon is what he calls the “revolution” in social media.  Pointing to the fact that Facebook is approaching 1 billion users, Kundra went on to wax poetic about the role that social media have played in “toppling governments” and “destroying companies,” while adding that this revolution also presents opportunities to make money.

Is “disruption” the latest panacea to emerge from the technology cognoscenti?  Now from my point of view, toppling governments is fine, as long as they are governments that are hostile to the good old U.S. of A.  And when I get angry at some corporate monolith for providing bad service or products, I might–in the stygian abyss of my id–wish them to be destroyed.

But overall, I cannot share Kundra’s delight in “disruption,” any more than I can share the glee with which some promote anarchy.  It is too true that many companies and governments need to be cleaned up, but are we then to simply throw out these babies with their bath water?

Certainly, Nazi Germany needed disruption.  Stalinist Russia could have stood a good dose of it as well.  But unless we’re talking serious evil from a government, dictator, or corporate entity, how can we as civilized humans champion a course of “disruption”?

And Kundra is not the only one using such language.  I am hearing it more and more from the analyst community, notably in technology.  This is wrong–and wrong-headed–and it bespeaks a level of immaturity that should not be, but is.

Now if anyone would care to disrupt the starting lineup of my least favorite baseball team, we should talk.

Greetings, blogsters.  This is my first brief report from the ACORD LOMA  Insurance Systems Forum being held this week in steamy Orlando, FL.

As the above headline notes, several of the announcements coming out of this conference are about being mobile–either new mobile services/products or addition of mobile capabilities to existing wares.  Among them:

SeaPass Solutions, Inc.  announced a new mobile capability for its Insurance Portal 3.0 for personal and commercial lines.  The new offering is said to enable agents and consumers to easily communicate and manage business with carriers.

MajescoMastek launched the new enhanced version of its Elixir North America Policy Administration System for annuity, health and life insurance products.  Version 6.0 also includes mobility applications.

Interactive Intelligence Group, Inc. released a new software platform that enables users to rapidly deploy customer service applications on multiple mobile operating systems, devices, and social media websites.

Synechron Inc. announced the launch of Mobile Platform, designed for the auto insurance industry, which is said to enable carriers and distribution channels to submit new business, process new claims, service clients, and enable policy holders to conduct various self-service activities.

Polaris Financial Technology Ltd. launched Intellect Claims, a cloud-enabled claims processing system which covers several lines of business, including Life and Disability Health.  Mobile configurations are also available, the company said.

Stay tuned for more news and views.  We may even schmooze.

With the advent of Internet-based networking and conferencing technology, it’s not unusual these days to see various interests promoting “virtual” conferences.  And in this age of continuing recession, who could blame conference-goers for wanting to save money on airfare, lodging, meals, etc.?  Put these two ideas together and you have a pretty good case for the live trade show or educational conference going belly-up in the near future. 

But it’s not going to happen–for several important reasons.  First, I have not heard that virtual events are a roaring success, so if it isn’t going to yield significant benefits, why go virtual?  Second, the virtual event may try to deliver all the benefits of the live version, but nobody is fooled.  There simply is no substitute for being live at an event and interacting in person (not across a Skype bridge) with the speakers and other attendees.  It’s like that commercial of a mother interacting with her daughter about the young girl’s role in the school play–an interaction which is at first in-person, then somehow changes to web cams and telephones, with Mom on a plane going far away.  The advertiser would like moms to think that virtual is just as good as live, but deep in our hearts we know it isn’t. 

Then there’s the lack of opportunity for real (not just real-time) interaction with colleagues and friends–interaction which, at least in our industry, is a staple of the relationships that are so important to us.  If this were Star Trek, maybe we could do this whole thing on the “holodeck,” but even that futuristic fantasy factory can’t furnish the real article to users.  If I’m going to sit down over coffee or a beer with a friend, I’d prefer to do it at a pub or restaurant, not in my underwear at the computer with a beverage I prepared myself.  But maybe that’s just me. 

Finally, there is the radical idea that people like to travel to nice places and stay in nice hotels and visit with their friends for a few days.  While I don’t go to as many conferences as I once did, I still do relish the time with colleagues spent at a beach  or around the pool or at a lunch or dinner. 

This is not to completely trash virtual events, however.  Web seminars, for example, are highly useful and productive for both sponsors and attendees.  [Disclosure time: I moderate quite a few of these events.] They are focused events that deal with a particular subject, and provide information–both general and product-specific–that attendees self-select to receive.  Again, we’re spending about an hour of our time, and we are not replacing in-person interaction. 

So–do you think the whole trade show/educational conference format is dead?  Leave your opinions here!

Having worked for many years as a journalist and writer in the technology industry, it was a bit of a shock to come over to our particular industry sector some 15 years ago.  Compared to the cut-throat atomosphere of the technology industry itself, insurance and financial services seemed like a quaint little hamlet trying to survive amidst surrounding giant cities. 

And I have to admit that my first impression was that our industry was literally years behind others in terms of technology adoption–and general tech coolness.  It took me some time to realize that insurance is a very conservative industry precisely because we have valuable assets to protect: namely, the information entrusted to us by our customers.  We wouldn’t want to own a “piece of the rock” if the company involved became known as a risk-taking enterprise.  We’re insurers; we don’t like risk. 

It also seems to me that because we aren’t on technology’s cutting edge, our technology experts are looked upon as somehow less competent and less hip than those in other sectors who are more willing to take a chance on new and unproven technologies.  That’s really unfair, though, because we are being judged not on our own technological merits, but on the technology spending habits of the industry we serve. 

So I just wanted to take this space to praise the IT professionals in insurance and financial services.  I can assure you that many of these folks are just as expert in their fields as those who serve other industries.  It’s easy to look at insurance and financial services and berate us for lack of technological (and financial) risk-taking, but what else would you expect from companies whom you are trusting with personal information?  What else would you want from an entity that you are trusting to save your bacon if your own decisions don’t work out–or if some natural disaster strikes? 

My thanks and praise go out to the great majority of IT workers in our industry.  In my book, you are second to none.

At this year’s IASA conference, I will be moderating and participating as a panelist in a session on “The State of Data Security in Insurance”  (Tuesday, June 5, 1:30-3:00 p.m. in sunny San Diego).  As such, I’m very interested to see what is being said about the issue in our industry, which has (until a couple of years ago) escaped much of the cyber crime onsalught.  In a recent issue of Insurance Networking News, my erstwhile colleague Joe McKendrick posits an interesting question: “Should data security be automated to the point where the process of achieving it is completely invisible to end users?” 

He then goes on to chronicle a case in which an insurer wisely opts for a combination of automated security measures and employee training/awareness as the hub of its security strategy.  Such an approach is certainly what I would recommend, but I would add that the job of securing vital data doesn’t end there. 

In considering the question, my first thought was that I wish there were some automated program or combination of programs that would completely handle security behind the scenes.  God knows we would all like to achieve that, but our maker also knows that there is no such thing as a completely secure enterprise.  The addition of employee awareness and involvement is certainly a valuable arrow in the security quiver–but it is not the hydrogen bomb that will wipe out all threats.  In fact, physicists have yet to come up with such a weapon in the fight against cyber crime. 

There is, however, a strategy that will significantly enhance our chances of catching perpetrators–and more importantly, amerliorating the effects of cyber crime, and I have written about it previously in this very space.  We can use our security tools to help identify potential threats and to prepare ourselves to aggressively pursue those who would break in and steal our precious data.  In a way, we need to create our own internal SWAT teams to go after the bad guys, rather than just building new walls for them to scale. 

Why this aggressive approach?  Primarily because the forces of cyber evil are very well funded (by organized crime, national governments, spy agencies, etc.) in their battle to take what is not theirs.  Legitimate security firms have a difficult–if not impossible–task in even staying in step with the bad guys.  So, enterprises that take the bull by the horns and resolve to actively pursue breachers will at the very least minimize damage to themselves, their data, and their customers. 

This is a matter of will just as much as it is a matter of time and effort spent–not to mention budget.  The best defense may indeed be a good offense.  How aggressive should your enterprise be in taking on a more assertive role when it comes to security?   Well, how important is that data you have in your system? 

While acting as the moderator on an Insurance Networking News webinar today, I heard some interesting comments on the subject of how customers want to interact with companies. 

Martina Conlon, an analyst at Novarica, shared a view that is becoming all-too-apparent in this age of technology overload.  While we might expect that many customers would want online contact–and they do–it is also clear that customers have a wide range of preferences, she noted.  Most would prefer to interact by email–not surprising because it is quick and anonymous, and it can be utilized at any hour of any day.  Yet that doesn’t mean that some wouldn’t  rather talk to a human being on that quaint old device, the telephone. 

It occurred to me that marketing today is far more complicated than it used to be.  Back in the day, when I was an executive for a large PR agency, conventional wisdom was that Baby Boomers were the monster marketing block, and just about everything should be aimed at them.  Today, Boomers are still a key group, but when it comes to technology, they appear to be less homogeneous than we might have assumed. 

Part of that is probably due to the fact that most of us will trust technology only so far.  If it works quickly and is easy, we’re fine with that.  On the other hand, if it becomes complicated, or if the choices offered don’t answer our real needs, we’d just as soon interact live with someone who is alive.  Add to that the many who would prefer to interact via their mobile devices–or even utilize snail mail–and the marketing picture becomes clear as mud. 

We have today entered the age of micro-marketing–where we pay less attention to blocks of consumers and more attention to individual consumers themselves.  This is a trend that will likely continue as many consumers elect to share their personal information (likes, dislikes, shopping habits, political affiliations, religion, etc.) in the very public arena of cybersace.  Only some consumers’ desire for privacy and anonymity will push back against this trend. 

The concept of risk is implicit in the basic paradigm of insurance, and insurers will do all they can to accurately forecast such risk in order to set insurance premiums that will, in the end, make a profit for the insurer.  In order to bring that about, insurers try to build risk “models”–these days made up of computer representations of the risks associated with a certain exposure. 

This is the way we do business, but I recently ran across a brief article that insists that risk cannot be modeled.  According to this article on the Ontonix web site, “Risk is a subjective reflection of the (subjective) perception of danger and, at the same time, it hides an attempt to predict the future. In fact, risk is not a physical quantity. It doesn’t exist in Nature. There are no non-negotiable laws of risk (like the law of gravity for example) that hold everywhere in the Universe and that may be verified on experimental grounds. The concept of risk is flawed. It is an imaginary, intangible and non-physical concept.” 

As a result, says the piece, risk cannot be accurately modeled any more than the future can be accurately predicted.  The article continues: “Man has come up with many intangible and non-physical concepts. Such concepts may be easily spotted – it is extremely difficult to reach consensus even when a definition has to be established. In the case of risk there isn’t a universally accepted definition.” 

You know, I really can’t argue with anything this author has said.  The author is correct in saying that there is not physical thing we call “risk,” and there are no laws of “risk” that can be verified on experimental grounds.  So why do I still find this line of thinking to be in error?  The answer is that the question is incomplete.  My definition of risk would be something like: The relative probability that some specific event or events will occur within a specific time frame.   

If I now ask myself whether or not experts can put together a model that will demonstrate the probability that specific event A will occur within timeframe X, I think the answer is often (but not always) yes.  “Risk” alone cannot be measured, as the author says, but risk of a certain event occurring within a certain time frame at a certain location, etc., is a different matter.  There are many critical variables in such a model, to be sure, but it seems to me that the “time frame” is central.  This is why I believe that certain risks can be accurately modeled and others not. 

For example, if we want to produce a risk model for a hurricane occurring in the next week at a certain location, we are able to call on weather forecasts and to extract historic data that would give us a fairly accurate picture of the probability of that happening.  Will the model be 100 percent accurate?  Probably not–and if this is the standard demanded, then the author of the article is absolutely correct in saying that risk cannot be modeled.  The key is that risk cannot be measured to an exact number in most cases, but that isn’t the point of having a model.  The point is to estimate the probability of a hurricane occurring in the next week at a certain location–so if the probability turns out to be 1 percent, I’ll probably risk taking my vacation there. 

As I said, however, time frame is a critical variable with models.  Climate change proponents are trying to use models to predict weather behavior over the next 100 years.  A century is a long time, and a lot could happen that could have an impact on the weather–including things like sunspots that have nothing to do with greenhouse gas emissions due to evil humans.  So, such a model seems very likely to be too flawed for us to take it seriously. 

Sadly, however, many do.