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But this is a really important client: Difference between revisions
But this is a really important client (view source)
Revision as of 08:50, 19 October 2020
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Amwelladmin (talk | contribs) (Created page with "{{a|negotiation|}}Of all the preposterous rationales for weakening key protections in your legal docs, this is perhaps the most bizarre: that the client is ''so big'', and is...") |
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{{a|negotiation|}}Of all the preposterous rationales for weakening key protections in your legal docs, this is perhaps the most bizarre: that the client is ''so big'', and is going to generate ''so much revenue'', that it warrants relaxing the firm’s ordinary, prudent, [[Credit risk|credit]] and [[market risk]] standards to the point of meaninglessness, on the premise that only this will nudge this wondrous golden goose across the threshold. The firm would not ''dream'' of similar indulgence for a small client doing a handful of trades. | {{a|negotiation|}}Of all the preposterous rationales for weakening key protections in your legal docs, this is perhaps the most bizarre: that the client is ''so big'', and is going to generate ''so much revenue'', that it warrants relaxing the firm’s ordinary, prudent, [[Credit risk|credit]] and [[market risk]] standards to the point of meaninglessness, on the premise that only this will nudge this wondrous [[golden goose]] across the threshold. The firm would not ''dream'' of similar indulgence for a small, pissant client doing a handful of vanilla trades. | ||
We hope the logical car-crash this thinking represents is apparent on its face, but let’s say it out loud anyway: Said big [[golden goose]] generates said huge {{strike|sales credits|revenues}} because it trades a lot, and in big size. It takes more risk. A LOT MORE RISK. A client taking big risks poses a risk to its counterparties. Precisely when those big risks go wrong, its counterparties will be making big rewards which, if that big goose has just nose-dived into a hole in the ground, they will not be able to redeem. | |||
There is no economy of scale when it comes to risk management, folks. It is a ''dis''economy of scale. The risk is [[convex]]. In a bad way. | |||
{{sa}} | |||
*[[All our other counterparties have agreed this]] | |||