Individual - Risk Article

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In the benign market model, the basic unit of commercial replication is the individual. The analogy to the ecosystem is close but not perfect:

• The crabs can pole-vault: Individuals can move from firm to firm; genes cannot leave one host and join another (except via reproduction)
  
• Firm’s don’t “evolve”: However transfixed their executives might be with evolutionary metaphors, corporations do not evolve like organisms. That would involve dying. Firms adapt during life. This is Lamarckian evolution at best. But, since the crabs can pole-vault, a Lamarckian approach might make sense: The firm is a vessel for replicating individuals. It is not a replicator itself.
• The firm has NO conscience: No matter how often we tell ourselves it has a corporate personality, responsibility and “conscience”, these are fictions. A firm has no personality other than the one that emerges from the individuals comprising it. Ouija board style.
  

Just as the evolutionary fitness of an organism can only be explained by the reproductive capacity of its genes, so the fitness of an firm is a function of the survival instincts of its employees.

Risk controllers

For employees who are part of the infrastructure rather than revenue generation – that is, most of them – there is a sharp asymmetry. They are not rewarded for ambition or risk taking – that is not your job, and to be incentivised that way would be a significant conflict of interest. But nor are they rewarded for actually avoiding risks – a bad outcome that did not eventuate is not just the dog that did not bark in the night-time, it is part of the infinite set of possible but non-existent events.