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:''Everybody has a plan until they get punched in the mouth.'' | :''Everybody has a plan until they get punched in the mouth.'' | ||
::—Mike Tyson | ::—Mike Tyson | ||
A traditional risk manager will be conditioned to using control techniques to anticipate and eliminate all risk. In a [[complex system]] this is | A traditional risk manager — that is, one managing [[complicated system]]s and not [[complex system|complex]] ones<ref>Open question — a ''gaping'' open question, like when your goalie has come up for a corner — is ''why'' a traditional risk manager is managing what is undoubtedly a [[wicked environment]] using tools suitable for a [[tame environment|tame]] one. But it was ever thus: [[Black-Scholes option pricing model]], which is predicated on a normal distribution, can’t work with The [[Black swan|tail events]] and whose failure in those circumstances led directly to both the [[LTCM]] collapse and the [[Great Financial Crisis]], is still widely used today, after all.</ref> — will be conditioned to using control techniques to anticipate and eliminate all risk. | ||
In a [[complex system]] this is not just hard; ''it is impossible''. One must instead depend on local managers and experts making spontaneous, provisional decisions in real-time to address the situation as they see it and under conditions of significant uncertainty. A [[complex system]] is not totally random — in that case, any action would be as good as any other — so some control is possible, but it is ''not'' possible to prescribe in advance what that action should be. | |||
Therefore plan, but not with an expected outcome in mind. Plan ''for the unexpected''. Have band-aids, a Swiss Army knife, some duct tape and a towel with you. Try to imagine how things might unfold, and watch them as they do, adapting as you go. | Therefore plan, but not with an expected outcome in mind. Plan ''for the unexpected''. Have band-aids, a Swiss Army knife, some duct tape and a towel with you. Try to imagine how things might unfold, and watch them as they do, adapting as you go. | ||