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Firm - Risk Article: Difference between revisions
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*'''{{risk|Individual}} self-interest''': Cross-cutting interpersonal relationships, good and bad, between {{risk|individual}}s at the firm relative to respective positions in the firm’s hierarchy, between individuals at different firms etc. | *'''{{risk|Individual}} self-interest''': Cross-cutting interpersonal relationships, good and bad, between {{risk|individual}}s at the firm relative to respective positions in the firm’s hierarchy, between individuals at different firms etc. | ||
*'''{{risk|Scale}} and {{risk|complexity}} - a natural trade-off ''': There is a geometric relationship between number of components and their possible configuration. The larger the firm the greater opportunity to wring economies from its scale, but there are inflection points. As soon as a {{risk|firm}} is justified in deploying resources solely to lever its {{risk|scale}}, greater {{risk|complexity}} is assured. This is the {{risk|scale paradox}}: The more configurations the more scope for complexity. The more complexity the more confusion. The more confusion the more scope for fear. The larger a firm gets, the more complex it becomes. A sole trader is salesman, receptionist, janitor, legal and operations. At a point it becomes necessary and desirable to hire dedicated personnel to carry out these roles. Some of these roles are risk-taking, revenue-generating roles. The rest are operational in nature (legal, operations, risk) and they are costs. These roles are incentivised by means of cost reduction not revenue generation. | *'''{{risk|Scale}} and {{risk|complexity}} - a natural trade-off ''': There is a geometric relationship between number of components and their possible configuration. The larger the firm the greater opportunity to wring economies from its scale, but there are inflection points. As soon as a {{risk|firm}} is justified in deploying resources solely to lever its {{risk|scale}}, greater {{risk|complexity}} is assured. This is the {{risk|scale paradox}}: The more configurations the more scope for complexity. The more complexity the more confusion. The more confusion the more scope for fear. The larger a firm gets, the more complex it becomes. A sole trader is salesman, receptionist, janitor, legal and operations. At a point it becomes necessary and desirable to hire dedicated personnel to carry out these roles. Some of these roles are risk-taking, revenue-generating roles. The rest are operational in nature (legal, operations, risk) and they are costs. These roles are incentivised by means of cost reduction not revenue generation. | ||
===The horribly public interior monologue of the [[Corporate personality|corporate person]]=== | |||
Unlike a real person, a [[corporation]]’s interior monologue is not private. Nor is it tactful or discreet. It is tactless and verbose comprising self-interested individuals shouting at the same time, [[adding]] each other to conversations they don’t care to be a part of. {{author|Joel Bakan}} says a [[corporation]] is like a [[psychopath]]. It might be ''run'' by them – that’s entirely plausible – but in its own personality it is more like a paranoid schizophrenic. In the analog world this was copeable; in this age of infinite information it has proven to be a far greater bane than anyone realised. ''Everything'' is [[discovery|discoverable]]; and like all communications that can be pulled out of context, inevitably it looks worse in hindsight than it did when it was written down. | |||
There is a case that the law of [[privilege]] needs to be entirely re-thought for the machine age to recognise that a [[corporation]]'s interior monologue should be allowed to be as private as an {{riskindividual}}’s: judicial proclivities have been heading in the other direction<ref>{{casenote1|Three Rivers No. 5}}, and {{casenote|Serious Fraud Office|Eurasian Natural Resources Corporation}} though more recent decisions are stepping back from this somewhat.</ref>. This disincentivises the free expression of ideas and concerns within an organisation, which cannot be a good thing. | |||
===Other themes=== | ===Other themes=== | ||
*Firms as the vessel for the gene – an extended phenotype for the individual<br> | *Firms as the vessel for the gene – an extended phenotype for the individual<br> | ||
*Firms as individual responsibility expungers. <br> | *Firms as individual responsibility expungers. <br> | ||
{{seealso}} | |||
*[[Privilege]] | |||