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All of this hindsight-coloured hand-wringing is good sport, but what to do about it? Regular readers might not be surprised to hear the JC say that deprogramming the steampunk machine and asking people to use their experience, judgment and intuition to ask unusual questions. | All of this hindsight-coloured hand-wringing is good sport, but what to do about it? Regular readers might not be surprised to hear the JC say that deprogramming the steampunk machine and asking people to use their experience, judgment and intuition to ask unusual questions. | ||
It isn’t hard to imagine the scene: a weekly operational risk meeting with a standing agenda, designed systemically and mechanically to canvas and manage risks to the business. | |||
It will be this because we are acculturated to be in control, for systems to be operating, in good standing, and all engines ticking along without significant strain. | At this meeting senior “stakeholders” will discuss cash breaks, outstanding undocumented confirms, position concentrations across the book. Things like that. The inevitable procedural glitches of life in a complicated modern financial services business. All kinds of metrics will be presented and analysed, laid out in graphs, charts and data tables. A dashboard of “high risk” clients, derived from these operational metrics, may be presented, but the [[RAG]] array will read uniform green — perhaps studded with the odd amber — an easily-addressed talking point included “for good order” but, we are assured, no materially elevated risk of loss. | ||
It will be like this because we are acculturated to be in control, for systems to be operating, in good standing, and all engines ticking along without significant strain. We have been acclimatized to believe that the greatest sin is to disrespect ''process''. | |||
But what good is a risk report designed to tell you everything is under control? What real world function does this fulfil? | |||
You ask, “did [[Malachite]] appear on any risk reports in the two years leading to its collapse? Did [[Archegos]]? Did [[Amaranth]]?” | You ask, “did [[Malachite]] appear on any risk reports in the two years leading to its collapse? Did [[Archegos]]? Did [[Amaranth]]?” | ||