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It isn’t hard to imagine the scene: a weekly operational risk meeting with a standing agenda, designed systemically and mechanically to canvas and manage risks to the business. | It isn’t hard to imagine the scene: a weekly operational risk meeting with a standing agenda, designed systemically and mechanically to canvas and manage risks to the business. | ||
At this meeting senior “stakeholders” will discuss cash breaks, outstanding undocumented confirms, position concentrations across the book. Things like that. The inevitable procedural glitches of life in a complicated modern financial services business. All kinds of metrics will be presented and analysed, laid out in graphs, charts and data tables. A dashboard of “high risk” clients, derived from these operational metrics, may be presented, but the [[RAG]] array will read uniform green — perhaps studded with the odd amber — an easily-addressed talking point included “for good order” but, we are assured, no materially elevated risk of loss. | At this meeting senior “stakeholders” will discuss cash breaks, outstanding undocumented confirms, position concentrations across the book. They will take it in turns to talk to their slide. If the steerco chair got out of the wrong side of bed, he may snap at some poor bastard from operations whose CASS attestation seems anaemic. | ||
His questions will by not ''where is your risk'', but why are you suffering risk, as if risk is not an immutable function of commercial life. | |||
Such grumpiness is outdated in these kind and [[empathetic]] times. It has a chilling effect on on unguarded expression of concern. | |||
Under kinder stewardship the steerco will Things like that. The inevitable procedural glitches of life in a complicated modern financial services business. All kinds of metrics will be presented and analysed, laid out in graphs, charts and data tables. A dashboard of “high risk” clients, derived from these operational metrics, may be presented, but the [[RAG]] array will read uniform green — perhaps studded with the odd amber — an easily-addressed talking point included “for good order” but, we are assured, no materially elevated risk of loss. | |||
It will be like this because we are acculturated to be in control, for systems to be operating, in good standing, and all engines ticking along without significant strain. We have been acclimatized to believe that the greatest sin is to disrespect ''process''. | It will be like this because we are acculturated to be in control, for systems to be operating, in good standing, and all engines ticking along without significant strain. We have been acclimatized to believe that the greatest sin is to disrespect ''process''. | ||
But what good is a risk report designed to tell you everything is under control? What real world function does this fulfil? | But what good is a risk report designed to tell you everything is under control? What real-world function does this fulfil? | ||
You ask, “did [[Malachite]] appear on any risk reports in the two years leading to its collapse? Did [[Archegos]]? Did [[Amaranth]]?” | You ask, “did [[Malachite]] appear on any risk reports in the two years leading to its collapse? Did [[Archegos]]? Did [[Amaranth]]?” | ||