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Risk taxonomy: Difference between revisions
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Any [[taxonomy]] is a [[narrative]]. Like any hierarchical organising system, a [[taxonomy]] commits you to ''one'' way of looking at the world, ''at the expense of all others''. Now this a necessary evil when it comes to concrete, physical things, like books: the [[Dewey decimal system]] is a single hierarchy — a ''[[narrative]]'' — by necessity: a physical thing cannot be in two places at once. So the curator of a library — libraries: remember them? — must settle on a single taxonomy (subject matter, not author, or title, or publisher) and, for better or worse, stick to it. Because one physical book can’t be in two places at once. | Any [[taxonomy]] is a [[narrative]]. Like any hierarchical organising system, a [[taxonomy]] commits you to ''one'' way of looking at the world, ''at the expense of all others''. Now this a necessary evil when it comes to concrete, physical things, like books: the [[Dewey decimal system]] is a single hierarchy — a ''[[narrative]]'' — by necessity: a physical thing cannot be in two places at once. So the curator of a library — libraries: remember them? — must settle on a single taxonomy (subject matter, not author, or title, or publisher) and, for better or worse, stick to it. Because one physical book can’t be in two places at once. | ||
But ''legal'' risks ''aren’t'' physical things. They aren’t concrete. They are the must ''un''concrete things imaginable. They’re amorphous, will-o’-the-wisp, [[black swan]]s: they [[emergent|emerge]], coagulating in mid air like suffocating ectoplasms, from ''nowhere''. These are obstreporous phantoms, silently incubating in harmless, dusty corners so [[tedious]] we can scarcely bring ourselves to | But ''legal'' risks ''aren’t'' physical things. They aren’t concrete. They are the must ''un''concrete things imaginable. They’re amorphous, will-o’-the-wisp, [[black swan]]s: they [[emergent|emerge]], coagulating in mid air like suffocating ectoplasms, from ''nowhere''. These are obstreporous phantoms, silently incubating in harmless, dusty corners so [[dreary|tedious]] we can scarcely bring ourselves to pay them attention.<ref>Like the BBA’s process for setting the sleepy old [[London Inter Bank Offered Rate]]. Anyone [https://www.google.com/search?&q=libor+%22mundane%22+%22boring%22 Remember that old yawnfest?</ref> | ||
In the last twenty years the global finance industry has faced up to 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. Risks happen “when” everyone is looking in another, wrong, direction. '''Risks happen ''because'' everyone is looking in another, wrong direction'''. So why will everyone be looking in another, wrong direction? BECAUSE THEIR [[risk taxonomy|RISK TAXONOMY]] IS TELLING THEM TO. Their [[risk taxonomy]] ''is'' that other, wrong direction. | |||
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, post fact, prompt you 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”, she will solemnly say, revisit our [[service catalog]]. We shall have a new steering committee to oversee that. And an operating committee to implement it. And with sound governance, we shall build a new, stronger, better, [[risk taxonomy]]. | |||
{{seealso}} | {{seealso}} | ||
*[[Black swan]] | *[[Black swan]] | ||
*[[Doctrine of precedent]] | *[[Doctrine of precedent]] | ||
*[[Steering committee]]s and [[operating committee]]s | |||
*{{risk|Rumsfeld’s taxonomy}} | *{{risk|Rumsfeld’s taxonomy}} | ||
{{ref}} | {{ref}} | ||