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Risk taxonomy: Difference between revisions
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{{a|risk| | {{a|risk| | ||
[[File:Taxonomy.jpg|450px|frameless|center]] | [[File:Taxonomy.jpg|450px|frameless|center]] | ||
}}A fine occupation for the idle | }}A fine occupation for the idle risk manager: describing, and grouping in relation to each other, the entire catalog of risks that face your undertaking, as if unrealised hazards can be ranked, boxed and sorted like the phyla of butterflies, tits or thrush. | ||
This exercise can occupy as little — a breakout session on an away-day — or as much — the permanent task of a dedicated division in the department — of your firm's intellectual capacity as you have going spare: organisations that run to the bureaucratic<ref>''You'' know who you are.</ref> may become so swooned by this notion that they can find little time to do anything else. For how can one assess a risk without knowing from which family of what genus in what species it hails? | This exercise can occupy as little — a breakout session on an away-day — or as much — the permanent task of a dedicated division in the department — of your firm's intellectual capacity as you have going spare: organisations that run to the bureaucratic<ref>''You'' know who you are.</ref> may become so swooned by this notion that they can find little time to do anything else. For how can one assess a risk without knowing from which family of what genus in what species it hails? | ||
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In the last twenty years the global finance industry has faced some proper, existential threats. It has [[Jenseits von Gut und Böse|looked long into the abyss]]. [[LTCM]]. [[LIBOR]]. [[Madoff]]. [[Dotcom]]. [[Lehman]]. None of these epochal shit-shows registered more than a faint pulse in the frame of consciousness of the most paranoid [[risk controller]] ''until they happened''. | In the last twenty years the global finance industry has faced some proper, existential threats. It has [[Jenseits von Gut und Böse|looked long into the abyss]]. [[LTCM]]. [[LIBOR]]. [[Madoff]]. [[Dotcom]]. [[Lehman]]. None of these epochal shit-shows registered more than a faint pulse in the frame of consciousness of the most paranoid [[risk controller]] ''until they happened''. | ||
''Nor will the next one'' | ''Nor will the next one''. | ||
Risks materialise ''when'' everyone is looking in another, wrong, direction. '''Risks materialise ''because'' everyone is looking in another, wrong direction'''. | |||
So why will everyone be looking in another, wrong direction? ''BECAUSE THEIR RISK TAXONOMY IS TELLING THEM TO.'' Their risk taxonomy, in other words, ''is'' that other, wrong direction. | |||
What to do? Sagely, the [[general counsel]] will mandate action to defend against this newly identified risk. “We must”, she will solemnly say, revisit our [[service catalog]]. We shall have a new [[steering committee]] | In this way, the [[risk taxonomy]], itself, ''is'' the risk. New risks will, ''by definition'', inhibit the seams, cracks and weak joints of your present [[narrative]] — they will prompt you, ''after'' the fact, to change your [[narrative]]. They will prompt you to build a new stable around the space where the horse ''you didn’t even know was there'' turns out to have been standing, before it bolted. | ||
What to do? Sagely, the [[general counsel]] will mandate action to defend against this newly identified risk. “We must”, {{sex|she}} will solemnly say, revisit our [[service catalog]]. We shall have a new [[steering committee]]. And an [[operating committee]] to implement it. And with that unimpeachably sound governance, ''we shall build a new, stronger, better, [[risk taxonomy]]''. | |||
{{ | {{sa}} | ||
*[[Black swan]] | *[[Black swan]] | ||
*[[Doctrine of precedent]] | *[[Doctrine of precedent]] | ||