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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, incomplete information, unanticipatable interactions between subsystems that ''seem'' unconnected but turn out to be [[tightly coupled]] in ways to which your | 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 meticulously-compiled [[risk taxonomy]] — hewn from torrents of hindsight — was blind. | ||
[[Known known]]s – | But [[Known known]]s – which [[risk taxonomy|risk taxonomies]] catalogue, and about which risk departments obsess, are not material risks at all, precisely ''because'' they are [[known known]]s, are properly identified, managed and controlled. | ||
The thing is [[black swans]], after they happen, are no longer [[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. | ||