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Risk Anatomy™

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When I was a child,
I spake as a child,
I understood as a child,
I negotiated as a child:
But when I became an eagle,
I put away my childish things.

1 Corinthians, 13:11


Are all risks fungible? Are all interchangeable? We would argue self-evidently not, though a visiting alien might have a hard time divining that from the way legal eagles go about their business.

A fearful negotiator will defend with equal fervour a counterparts or waiver of jury trials clause as she will an unconditional undertaking to indemnify an unrelated third party.

This seems to us to be a mistake. If there is anything a commercial lawyer can add to boost her present value to clients it is the superpower of quickly separating the few, terrifying items her client should be prepared to go to its grave before conceding, and the great preponderance of insignificant sludge that has accreted in the contractual forms, which if left in place, will blow away like so much chaff.

When you leave these things, a little part of you dies, but leave them, sometimes, you must.

At least where the commercial imperative means anything — and in commerce, we think it means a lot — the chaff outweighs the mortal threats, ten-to-one. To the young attorney it may feel prudent to sweat the small stuff — time and attendance heartily recommends doing that — and it will certainly feel satisfying: but it is a hollow type of enjoyment. It quickly palls.

At first, it seems no more enjoyable night can be had by a trainee eaglet than one spent pockmarking a harmless draft with “and/or on its or their or their agent’s behalves, as the case may, for the time being, be” every fifteen lines — but as young sir graduates from his articles he may start to bear in mind how short our time above ground is, how potentially sweet, and how long thereafter we are all due to spend below it, where things are not so rosy. He might arrange his mortal affairs, accordingly, to make the most of his time above “the ditch”. If he does so, he will endear himself greatly to his clients. If you love something — even boilerplate — let it go.

So let us invert the reductionists’ usual refrain.


Devise means of identifying real inflection points — places where your contract really hinges, and the good offices of the commercial imperative will not help — focus on them, get them right, and leave the sanding and polishing of the rest to the inevitable action of time and its handmaidens: the wind, rain, tides and sun.

Attacking and defensive decision-making

Venkatesh Rao on a podcast somewhere[1] saying in an institutional employment scenario, interests are aligned so that the employee’s mentality — the narrative — is to avoid hard decisions and make many easy decisions.

Defensive decision-making

Rendered in terms of an attack and defence metaphor, employment is defence: take many, small, protective, incrementally costly decisions that are priced into the model. Get any of these decisions wrong and you suffer massive downside — you get fired. Get these decisions right and each week you get a predictable shot of grain in the feeder in the corner of your cage. But the quid pro quo: the decisions are all easy: you must just follow instructions. This model is moderated because all permitted decisions are embedded into a slowly-evolving policy codebase that has pre-coded answers. When you exhaust any branch of the great decision tree, the instruction is: escalate.

Defensive decision-making under these conditions is like sitting an open-book exam: possible to fail, but only if you don’t know the drill. You are assessed on your ability to follow instructions, rather than deep immersion in the subject. Deep immersion, indeed, is somewhat dangerous, because it may prompt questions. The codebase must not be questioned.[2]

Attacking decision-making

The opposite kind of decision-making would be “visionary” — this is attack-minded decision making: it requires few, audacious, concentrated attacks where the probability of failure can be high: it doesn’t matter if nine attacks fail, if the tenth one succeeds. This doesn’t work if your role is defensive, as the corporate employee’s tends to be. An entrepreneur can afford to be attack-minded: her own capital is at stake. She knows how many shots she has in the locker. Only one of them needs to find its target.

Taylorist triage

This would all be fine if (i) hard decisions could all be broken down to easy decisions — so managing environmental complexity was a fundamentally reductionist process, boiling down to is components, and the “seniority pyramid” were really a mechanical triage where to ensure the hard decisions are made as effectively as they can be made (this is basically the Scientific Management theory of the game) and, by extention (ii) the senior people occupying higher rungs on the decision-making ladder got there through promotion based purely on account of their deep subject matter expertise: the higher one’s organisational altitude, the greater ones knowledge and expertise.

But neither of these things is plausible: those making promotion decisions at large organisations are, necessarily, already up the ladder, and they are expected to select for administrative qualities (budget, people and cost management) and in practice select defensively for self-similarity, and safety) not expertise or vision. One is rewarded for

See also

  1. this one.
  2. In the JC’s 25 years in big financial services companies, the hardest things to change were policies. Even where the policy was plainly wrong, non-sensical, and out-of-date, there was just a rolling of eyes, a “don’t go there girlfriend” vibe. Questioning policies was non-sound behaviour.