Give it a try: Difference between revisions

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Created page with "all too often a negotiator is told, by a risk controller, well I won't die in a ditch about it, but at least let's give it a try. Stop. The trade-off is between “give i..."
 
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all too often a negotiator is told, by a risk controller, well I won't die in a ditch about it, but at least [[let's give it a try]].
#redirect[[if in doubt, stick it in]]
 
Stop. The trade-off is between “give it a try” and “will anyone object?”:
 
“Will anyone object?” has an ascertainable, certain, upfront cost: the time and devotion of negotiation and, via escalation, risk management resources to clear the objection (whether the point is dropped or kept).
 
“Give it a try” has a delayed, remote and contingent benefit:
- delayed because the right will only ever have any value upon a close out;
- remote because any close-out, at any time, is extremely unlikely (<1% of counterparties would ever be closed out);
- contingent because
o it only has any value at all if we can persuade the counterparty to accept it
o even if we can, we don’t know
 whether we’d ever try in practice to exercise such a setoff,
 whether, if we did, it would be enforceable and
 whether, if we did and it was, there would be anything meaningful to set off against in the first place.
 
By my calculation, the present value of “give it a try” is close to zero. If the present value of “will anyone object?” is not zero, I wouldn’t even give it a try.
 
OB

Latest revision as of 13:12, 20 October 2022