Don’t take a piece of paper to a knife-fight
|
Negotiation Anatomy™
|
One of the JC’s maxims. If you have a real business risk, then you need a real business control for it. Not a piece of paper that you signed in 2007 and then stuck in a drawer.
To be sure, you can support your practical operational controls — really make them sing — with a stout legal contract, but if you don’t have any practical operational controls, or if the fellow who is supposed to be monitoring them is asleep at the switch, then the fact that, back in the day, credit had your docs unit engage in six months of hand-to-hand combat with your client to shove a NAV trigger in their ISDA is not going to get you out of a jam if you find out, some years later, that said client blew through the NAV limits you carefully confected, but nine months ago.
Sticking anything in a document that no-one will ever read again, and most people in your organisation wouldn’t understand even if they did, is a really bad way of hedging against a real risk.
Don’t go to knife fights
Time for one of the JC’s patronising little parables.
- A fellow was out on his bicycle, thundering down Cranley Gardens, as you do, enjoying the rush of wind through his thinning thatch and generally revelling in uncommon gratitude for the affordances — usually so depressing, for a man his age — of gravity. Cranley Gardens is steep, has a dogleg and a few intersecting crossroads that come at it from oblique angles. But straight-through traffic, such as our intreprid fellow, has the right of way — of that there is little doubt.
- Now imagine that, notwithstanding the plain legal position, a jalopy careened from one of those junctions without looking and into his path. How much comfort will it be to our cycling hero, as he bodily tests out its crumple zone, that he was in the right? We would respectfully submit, none at all. So our man in Cranley takes a measure of caution, constantly scans the intersections, moderates his speed, and stands ready to slam on the brakes should some damn fool pull out in front of him.
This — heuristic and, yes, fallible dynamic risk management, is the only way to cope with the mortal risks of a complex, non-linear system. It is behaviour only a young lad, still convinced of immortality, would query.
And we state no more than the bleeding obvious when we surmise that the satisfaction our cycling hero might derive from knowing he was in the right, and had been all along, and that the other chap was utterly, legally, to blame, without question of mitigation or even contributory negligence — that simple pleasure runs a distant second to the inconvenience of the six months he’ll spend in traction recovering if he is lucky, at that tortfeasor’s sole and unlimited expense, and the years of painful therapy he’ll need if he is ever to walk again.
Your Additional Termination Events? They are like the satisfaction of knowing that your hospital bed is fully paid for.