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Playbook: Difference between revisions
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[[Playbook]]s are [[algorithm]]s for the [[meatware]]: they maximise efficiency when operating within a fully understood environment. They are inhabited exclusively by [[known known]]s. No [[playbook]] will ever say, “if the counterparty will not agree this, make a judgment about what you think is best.” All will say, “any deviations from this requirement must be approved by [[Litigation]] and at least one [[Credit]] officer of at least C3 rank.” | [[Playbook]]s are [[algorithm]]s for the [[meatware]]: they maximise efficiency when operating within a fully understood environment. They are inhabited exclusively by [[known known]]s. No [[playbook]] will ever say, “if the counterparty will not agree this, make a judgment about what you think is best.” All will say, “any deviations from this requirement must be approved by [[Litigation]] and at least one [[Credit]] officer of at least C3 rank.” | ||
As far as they go, [[playbook]]s speak to the belief that, as [[normal science]], ''the only material [[risk]] lies in not complying with established rules'': They are of a piece with the [[doctrine of precedent]]: when they run out of road, one must appeal to the help of a higher authority, by means of [[escalation]] to a [[control function]], the idea being (in theory, if not in practice) that the [[control function]] will further develop the [[algorithm]] to deal with the new situation, the same way the courts of the [[common law]] do — ''[[stare decisis]]'' — and it will become part of the corpus and be fed back down into the playbook of established [[process]]es.<ref>This rarely happens in practice. [[Control function]]s make ''[[ad hoc]]'' exceptions to the process, do not build them into the playbook as standard rules, meaning that the [[playbook]] has a natural sogginess (and therefore inefficiency).</ref> The [[algorithm]] operates entirely ''inside'' the organisation’s real {{tag|risk}} tolerance boundaries. This is a good thing from a risk monitoring perspective, and is inevitable as a matter of organisational psychology — [[if in doubt, stick it in]] — but it all comes at the cost of efficiency. The [[escalation]]s it guarantees are a profoundly [[waste]]ful use of scarce resources. | As far as they go, [[playbook]]s speak to the belief that, as [[normal science]], ''the only material [[risk]] lies in not complying with established rules'': They are of a piece with the [[doctrine of precedent]]: when they run out of road, one must appeal to the help of a higher authority, by means of [[escalation]] to a [[control function]], the idea being (in theory, if not in practice) that the [[control function]] will further develop the [[algorithm]] to deal with the new situation, the same way the courts of the [[common law]] do — ''[[stare decisis]]'' — and it will become part of the corpus and be fed back down into the playbook of established [[process]]es.<ref>This rarely happens in practice. [[Control function]]s make ''[[ad hoc]]'' exceptions to the process, do not build them into the playbook as standard rules, meaning that the [[playbook]] has a natural sogginess (and therefore inefficiency).</ref> The [[algorithm]] operates entirely ''inside'' the organisation’s real {{tag|risk}} tolerance boundaries. This is a good thing from a risk monitoring perspective, and is inevitable as a matter of organisational psychology — [[if in doubt, stick it in]], as [[Casanova’s advice|Casanova]] used to say — but it all comes at the cost of efficiency. The [[escalation]]s it guarantees are a profoundly [[waste]]ful use of scarce resources. | ||
In theory the [[control function]] will have its own playbook, and the “court of first instance” is as bound by that as the baseline process is by the basic playbook. There is an [[algorithm]], a recipe, and the main ill that comes about is by not following it. Hence the existence of an [[internal audit]] function. | In theory the [[control function]] will have its own playbook, and the “court of first instance” is as bound by that as the baseline process is by the basic playbook. There is an [[algorithm]], a recipe, and the main ill that comes about is by not following it. Hence the existence of an [[internal audit]] function. | ||