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Risk: Difference between revisions
→The nature of {{risk|risk}}
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:“''[[Policy]] is organisational scar tissue''” — {{author|Jason Fried}} | :“''[[Policy]] is organisational scar tissue''” — {{author|Jason Fried}} | ||
===The nature of {{risk|risk}}=== | ===The nature of {{risk|risk}}=== | ||
The real risks are the [[black swan]]s: risks that we don’t recognise as risks ''until they happen''. All significant market dislocations have come from blind spots. [[Known known]]s – about which firms | The real risks are the [[black swan]]s: risks that we don’t recognise as risks ''until they happen''. All significant market dislocations have come from blind spots, incomplete information, unanticipatable interactions between subsystems that ''seem'' unconnected but turn out to be [[tightly coupled]] in ways to which your fastidiously-compiled [[risk taxanomy]] — meticulously hewn from torrents of hindsight — was thoroughly blind. | ||
[[Known known]]s – about which risk departments firms and which their [[risk taxonomy|risk taxonomies]] catalogue, are not material risks at all, precisely ''because'' they are [[known known]]s and are properly identified, managed and controlled. [[Black swans]], after they happen, cease to be [[black swan]]s. | |||
Our constitutional insistence<ref>''[[Stare decisis]]'', anyone?</ref> in reviewing the tape for PAST PERFORMANCE means we obsess about risks in stables from which horses have already bolted. Eg (okay this is my hobby horse) [[close out netting]]. ''Real'' risks [[unknown unknown]]s won’t cleave to the organisational structure, much less the firm’s own [[risk taxonomy]] or division of responsibility for risk management. These things of necessarily, which is based on stables from which horses have already bolted. Therefore [[unknown unknown]]s will tend present across non-contiguous areas of risk management – the same risk might be partly legal, partly credit, partly market risk. Each in isolation may be containable, but combined effect less so. | Our constitutional insistence<ref>''[[Stare decisis]]'', anyone?</ref> in reviewing the tape for PAST PERFORMANCE means we obsess about risks in stables from which horses have already bolted. Eg (okay this is my hobby horse) [[close out netting]]. ''Real'' risks [[unknown unknown]]s won’t cleave to the organisational structure, much less the firm’s own [[risk taxonomy]] or division of responsibility for risk management. These things of necessarily, which is based on stables from which horses have already bolted. Therefore [[unknown unknown]]s will tend present across non-contiguous areas of risk management – the same risk might be partly legal, partly credit, partly market risk. Each in isolation may be containable, but combined effect less so. | ||