Difference between revisions of "Risk versus vulnerability"

From The Jolly Contrarian
Jump to navigation Jump to search
Tags: Mobile edit, Mobile web edit
 
(2 intermediate revisions by the same user not shown)
Line 1: Line 1:
 
{{a|devil|}}Accidents ''will'' happen. Four strategies for coping: three focus on the accident, one focuses on your organisation.
 
{{a|devil|}}Accidents ''will'' happen. Four strategies for coping: three focus on the accident, one focuses on your organisation.
 +
===Accidents===
 
*'''Dealing with accidents''':
 
*'''Dealing with accidents''':
 
:*Respond to accidents when they happen
 
:*Respond to accidents when they happen
 
:*Limit damage accidents can cause
 
:*Limit damage accidents can cause
 
:*Minimise chance that accidents happen
 
:*Minimise chance that accidents happen
 +
{{Tabletop}}
 +
|'''Reaction'''
 +
|'''Damage Limitation'''
 +
|'''Avoidance/Prevention'''
 +
|-
 +
|
 +
[[Closeout]] <br>
 +
[[Event of default]]<br>
 +
[[Breach of contract]]<br>
 +
|
 +
[[Trade monitoring]]<br>
 +
Monitor for [[red flags]]<br>
 +
Regular [[due diligence]]<br>
 +
 +
|
 +
[[Have good data]] and [[know your client]]<br>
 +
[[Relationship management]]<br>
 +
[[Credit lines]]<br>
 +
|-
 +
|
 +
Chaos<br>
 +
Fog of war<br>
 +
Panic<br>
 +
Urgency<br>
 +
Volatility<br>
 +
Fear<br>
 +
Lack of information: if you are at reaction point, chances are your information was already bad and will now be worse.<br>
 +
Compounding effect of above effects in combination.
 +
|
 +
Holistic views: where are the exposures concentrated? Where is market risk concentrated?Where are are margin multipliers thinnest? Are there any concentrations of red flags? Share data across credit, fnancial crime compliance, trading
 +
|
 +
Calm <br>
 +
Orderly <br>
 +
Timely <br>
 +
Systematic <br>
 +
Thorough <br>
 +
Inquisitive: the object is not to satisfy yourself that there is no risk but to to identify where ''is'' the risk
 +
|-
 +
|
 +
|
 +
|
 +
|-
 +
|
 +
|
 +
|
 +
|-
 +
{{Tablebottom}}
 +
===Vulnerability===
 
*'''Dealing with your [[organisational model]]''': Assuming accidents ''will'' happen, reduce vulnerability to them. Vulnerability comes in the form of unusual [[concentrations]]:
 
*'''Dealing with your [[organisational model]]''': Assuming accidents ''will'' happen, reduce vulnerability to them. Vulnerability comes in the form of unusual [[concentrations]]:
 
:*Concentration of energy — in a financial services firm, call this financial risk, or profit-and-loss generators
 
:*Concentration of energy — in a financial services firm, call this financial risk, or profit-and-loss generators
:*Concentration of population — different models of [[distributed network]]. Compare “hub and spoke” models like airports (fragile — take out a hub and large parts of the system are inoperable) with “multiple-node” networks like the internet (robust — take out a node and everything can flow a different way).
+
A:*Concentration of population — different modelsof [[distributed network]]. Compare “hub and spoke” models like airports (fragile — take out a hub and large parts of the system are inoperable) with “multiple-node” networks like the internet (robust — take out a node and everything can flow a different way).
 
:*Concentration of political/economic power— increases the vulnerability to harm from [[executive failure]].
 
:*Concentration of political/economic power— increases the vulnerability to harm from [[executive failure]].

Latest revision as of 11:03, 31 July 2020

The Devil’s AdvocateTM

In which the curmudgeonly old sod puts the world to rights.
The dog in the night timedesign principlesnormal accidents, complexity and system analysisbehavioural psychcologyplain englishpersuasiondesign thinkingorganisational modeltheory

Accidents will happen. Four strategies for coping: three focus on the accident, one focuses on your organisation.

Accidents

  • Dealing with accidents:
  • Respond to accidents when they happen
  • Limit damage accidents can cause
  • Minimise chance that accidents happen
Reaction Damage Limitation Avoidance/Prevention

Closeout
Event of default
Breach of contract

Trade monitoring
Monitor for red flags
Regular due diligence

Have good data and know your client
Relationship management
Credit lines

Chaos
Fog of war
Panic
Urgency
Volatility
Fear
Lack of information: if you are at reaction point, chances are your information was already bad and will now be worse.
Compounding effect of above effects in combination.

Holistic views: where are the exposures concentrated? Where is market risk concentrated?Where are are margin multipliers thinnest? Are there any concentrations of red flags? Share data across credit, fnancial crime compliance, trading

Calm
Orderly
Timely
Systematic
Thorough
Inquisitive: the object is not to satisfy yourself that there is no risk but to to identify where is the risk

Vulnerability

  • Concentration of energy — in a financial services firm, call this financial risk, or profit-and-loss generators

A:*Concentration of population — different modelsof distributed network. Compare “hub and spoke” models like airports (fragile — take out a hub and large parts of the system are inoperable) with “multiple-node” networks like the internet (robust — take out a node and everything can flow a different way).

  • Concentration of political/economic power— increases the vulnerability to harm from executive failure.