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{{a|negotiation|}}Of all the preposterous rationales for weakening key protections in your legal docs, this is perhaps the most bizarre: that the client is ''so big'', and is going to generate ''so much revenue'', that it warrants ''relaxing'' the firm’s ordinary, prudent, [[Credit risk|credit]] and [[market risk]] standards to the point of meaninglessness, on the premise that this, and ''only'' this, will nudge this wondrous [[golden goose]] across the threshold, into the hotel room and onto the satin-sheets of the double-king. 

The firm would not ''dream'' of similar indulgence for a small, pissant client doing a handful of [[vanilla]] trades.

Now, we hope the logical car-crash this thinking represents is apparent on its face, but let’s say it out loud anyway: Said big [[golden goose]] generates said huge {{strike|sales credits|revenues}} because it trades a lot, and i''n big size''. It takes more risk. A ''LOT'' MORE RISK. A ''big'' client, taking ''big'' risks in ''big'' size, poses a ''big'' risk to its counterparties. 

Precisely when those big risks come about, its counterparties will be the other side, making ''big'' rewards which, if that juicy big goose has just nose-dived into a hole in the ground, they will not be able to recover. This might leave them with a ''big'' hedging problem. 

There is no economy of scale when it comes to risk management, folks. It is a ''dis''economy of scale. The risk is [[convex]]. In a bad way. It might be a risk you were prepared to take, in small size, among a diverse and de-correlated group of small clients — and even then it is amazing how those correlations suddenly invert — but taking it in ''big'' size, against a ''single'' player —is that not the lesson of [[LTCM]], [[Amaranth]]{{strike| and|,}} [[Enron]] {{insert|and [[Archegos]]}}?

Yet, the world-weary old codger sits down on a rock and sets down his staff: for this, my friends, is the immutable way of the universe. We may not like it, but we cannot change it. It leads to two conclusions, neither enormously becoming for your risk management teams. ''Either'' we ''still'' haven’t learned the lessons of [[Enron]], [[Amaranth]] and [[LTCM]], and rely blindly on [[Black-Scholes]] models that, as we now know, only work until the point where you really wish they were working — ''or'' the sacred protections we carve into those granite [[master trading agreement]]s carry a lot less real value than we generally care to admit. 

Is that [[Don’t take a piece of paper to a knife-fight|piece of paper really the weapon you want when World War Three kicks off]]? Is the fraught [[negotiation]] some kind of charade; a piece of theatre we put on to demonstrate our willing, and keep in perpetual employment entire villages of risk controllers and negotiators — the same ones we seem intent on relocating to Ulan Bator because they’re so freaking expensive?

{{sa}}
*[[All our other counterparties have agreed this]]
*[[Don’t take a piece of paper to a knife-fight]]
*[[Platinum client]]
*[[Prime brokerage anatomy]]