The devil is not in the detail. The devil is the detail: Difference between revisions

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=== The essence is of the essence. ===
=== The essence is of the essence. ===
That our contracts must at some level, be able to be reduced to a fundamental essence isn’t just for [[Ultimate client|gentle pensioners]] dandling grandchildren on their knees. The neurotic particularisation of risks that are, basically generic, feathers the nests of many subject matter experts. Even sophisticated financial institutions — ''especially'' sophisticated financial institutions — need to easily reduce their contracts to simple fundamental precepts, because that is how they risk manage them: there is no machine, and certainly no human being, in the bowels of an investment bank that is constantly reading its portfolio of {{isdama}}s to ensure every letter is complied with, every implicit buried option exploited. These contracts are reduced to a few key parameters: the tail risks are buried, filed away, to be dealt with by the legal eagles in the unpleasant event that they should arise.<ref>Come to think of it, it is a wonder there ''isn’t'' a squadron of waxen, hairless drones buried in some call centre in Bucharest rifling through that mountain of documents manually covering off that exact risk. It would make a great subplot for an [[Opco Boone]] adventure, in fact.</ref>
That our contracts must at some level, be able to be reduced to a fundamental essence isn’t just for [[Ultimate client|gentle pensioners]] dandling grandchildren on their knees. The neurotic particularisation of risks that are, basically, generic feathers many a [[Subject matter expert|subject matter expert’]]<nowiki/>s nest.


This extra detail is, therefore ''heft'': to the extent it confers optionality, it is optionality the organisation knows nothing about and is in any case in no position to exploit; if it ''grants'' optionality, it is a risk the organisation has sold but is not managing in its books. In either case, the proverbial [[unknown known]]: we nod along and hope that, whatever happens it isn’t significant.
Even sophisticated financial institutions — ''especially'' sophisticated financial institutions — need  easily to render their contracts in simple fundamental terms, because that is how they risk manage them. There is no machine, and certainly no human being, in the bowels of an investment bank that is constantly monitoring the text of its {{isdama}} battery to ensure every covenant is performed, every representation true, every implicit [[option]] buried in a contingent fallback exercised, or costed, [[as the case may be]]. These contracts are reduced to their a few basic economic parameters: that is all the firm’s creaking IT infrastructure can manage. The rest — those lawyer-confected paranoid contingencies the firm paid so handsomely for; that deal with unfeasible externalities, improbable scenarios and outlying tail risks are buried, filed away, to be dealt with, absent any context, by the legal eagles in the heat of the improbably moment that they should arise.<ref>Come to think of it, it is a wonder there ''isn’t'' a squadron of waxen, hairless drones buried in some call centre in Bucharest rifling through that mountain of documents manually covering off that exact risk. It would make a great subplot for an [[Opco Boone]] adventure, in fact.</ref>
 
This extra detail is, therefore ''heft'': to the extent it confers optionality that the organisation [[Formal|formally]] ''and'' [[Substance and form|substantively]] knows nothing about and is in any case in no position to exploit; if it ''grants'' optionality, it is a risk the organisation has sold but is not managing in its books. In either case, the proverbial [[unknown known]]: we nod along and hope that, whatever happens it isn’t significant.


{{sa}}
{{sa}}
* [[Key investor information document|Key person]]
*[[Document risk]]
*[[Document risk]]
*[[Die Schweizer Heulsuse]]
*[[Die Schweizer Heulsuse]]
{{ref}}
{{ref}}
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