|
|
| (14 intermediate revisions by the same user not shown) |
| Line 1: |
Line 1: |
| 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
| |