Before an apocalypse becomes an apocalypse, it doesn’t look like an apocalypse
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Before an apocalypse becomes an apocalypse, it doesn’t look like an apocalypse.
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Let us coin a maxim: “before an apocalypse becomes an apocalypse, it doesn’t look like an apocalypse”. The studied, logical outrage vouchsafed by one in the entirely riskless position of twenty-twenty hindsight was not available to those on deck at the time. No-one knew or — at least until it was too late, even believed — Archegos would become Archegos. The decision calculus was nowhere near as obvious as it appears in the rear-view mirror: if it had been, the catastrophe would not have happened. Archegos’ positions may have rallied.
Furthermore, it is one thing to have a legal right to pull your trigger, it is quite another to resolve to use it. Especially if you don’t know how this all will play out. After the event there was only ever one option. Before it, there were twenty million dollars of annual revenues at stake. The decision to blow up a key client is not one many individuals will be prepared to make on their own. Institutional escalations are time consuming, fraught, intimidating things. To recommend affronting a platinum client is to invite a shellacking from someone along way further up the tree than you are. If these are your options, is it any wonder a risk manager will dodge the hard questions?