Letters
Crediting polish Mathematicians
Iread the article “ERM and Business Intelligence, Lessons from World
War II Codebreakers” (March/April
Contingencies) with great interest. I
believe more needs to be stated, how-
ever, about the Polish contribution in
cracking the Enigma. When the Ger-
mans began transmitting their first
military messages using an enhanced
version of the commercial Enigma ci-
pher machine in 1928, it didn’t take long
for Poland’s Cipher Bureau to realize
(astutely) that it needed talented math-
ematicians who were fluent in German
to decipher these messages.
Top left, Bletchley Park Mansion, bottom left, German soldiers using the Enigma Code Machine
Tag CONTINUED
Working against the clock and in desperate conditions,
Allied operatives in the 1940s managed to perfect a
frame work for developing and using intelligence that
is a model for today’s corporate risk managers.
&
Business Intelligence
ByTimCardinalandJinLi
© PICTORIAL PRESS LTD / ALAMY
W W W. CON TINGENCIES. ORG
COLOSSUS computing machine
used to read Nazi codes at
Bletchley Park, England, during
World War II
20 CONTINGENCIES MAR|APR. 11
Their success was partly because of in-
spired guesswork and partly because of
the application of group theory. During
the first half of 1938, the Poles were read-
ing about 75 percent of German army
and air force traffic.
In July 1939, just a few short weeks
before the Germans invaded Poland,
The work of Polish
cryptanalysts was so clev-
er that their British and
American counterparts
remained convinced, for
many decades, that the
Poles had accomplished
their feat by stealing a
German Enigma machine.
In fact, it was all due to
the Poles’ clever applica-
tion of mathematics.
For those who are in-
terested in reading more about this, I
would recommend the following:
■ ■ Battle of Wits, by Stephen Budianski,
Simon and Schuster, 2000
■ ■ Alan Turing: The Enigma, by Andrew
Hodges, Simon and Schuster, 1983
■ ■ Seizing the Enigma, by David Kahn,
Barnes & Noble Inc., 2009
■ ■ The Theory That Would Not Die, by
Sharon Bertsch McGrayne,
Yale University Press, 2011
■ ■ “How Polish Mathematicians Deci-
phered the Enigma,”
by Marian Rejewski, Annals
of the History of Computing,
Vol. 3, No 3, July 1981, available at
http://chc60.fgcu.edu/Images/ar-
ticles/Rejewski.pdf.
Thomas n . herzog
Reston, Va.
Lessons from World
War II Codebreakers
THE MOVIE’S CONCLUSION IS UNPREDICTABLE. In the openingscenes, the good guys suffer heavy losses fighting across multi-ple fronts. Prospects are bleak. Survival depends on discovering
and defeating the enemy’s next move. Our hero, through thrilling and
superhuman efforts, obtains complete military intelligence on the enemy—location, time, forces to be deployed, and enemy objectives.
How does the movie end? That depends on how the intelligence is used.
What if we change the setting from the battlefield to the financial sector? What if our hero is
an actuary using enterprise risk management (ERM) techniques?
A component of business intelligence—and hence business management—ERM has been in
the spotlight (and the hot seat) during the recent economic crisis. Both the National Association of Insurance Commissioners’ (NAIC) Solvency Modernization Initiative and the European
Union’s Solvency II will require ERM as an element of corporate culture, decision-making,
and business activities. But ERM literature too often focuses on the acquisition and delivery of
information, ignoring how that information will be interpreted or used. And that, as we know
from watching old movies about World War II, can be fatal.
ERM and Military Operations
Many parallels exist between business and military operations. Cryptanalysts—like actuarial, risk, financial, and investment analysts—are central to the creation of intelligence.
Military officers, like their corporate counterparts, bridge the gapbetween those who acquire
and those who use intelligence. Commanders (and upper management) use intelligence to frame
problems, plans, and decisions.
Military messages, just like ERM models and dashboards, contain an overwhelming amount
of information that can be turned into intelligence. But these messages aren’t the only source of
intelligence, nor is the intelligence they contain always used successfully. Eminent British military
historian John Keegan has identified five stages that are necessary in formulating and making intelligence useful. As outlinedin his entertaining and instructive 2003 book Intelligence in War, these are:
1. Acquisition—Intelligence has to be found. It may be available butoverlooked or not sought.
2. Delivery—Intelligence must be sent to potential users quickly, since it can go stale or be over-taken by events. Unless it is timely enough to be acted upon, intelligence loses value.
3. Acceptance—Intelligence has to be believed. Since a message can tell only part of the story,
MAR|APR. 11 CONTINGENCIES
21
military Enigma messages in Decem-
ber 1931. This was due, in part, to the
success of the French secret service
in obtaining two Enigma docu-
ments through covert operations
on Nov. 8, 1931. The first docu-
ment set out instructions for
using the machine, and
the second contained
directions for setting
its keys. The French
shared these documents
with both the Poles and
the British. While the
material didn’t help either
the French or the British,
the three energetic Polish
mathematicians used it to
deduce the wirings of Enig-
ma and to begin deciphering.
