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{{a|devil|<center><youtube>https://youtu.be/l2a1QBBVUDk?t=82</youtube><br>The inestimable Professor Greenberg in the flow.</center>}}{{Quote|'''[[JC]]''': [''Winding down a typically rambling rant''] “... so, I ask you: why have we been so ''bad'' at stopping catastrophic risks from happening? Leeson, [[LTCM]], [[Amaranth]], [[Enron]], Global Crossing, Kerviel, [[Madoff]], Bear Stearns, [[Lehman]], [[LIBOR]], [[Theranos]], London Whale, Mossack Fonseca, 1MDB, Wirecard ... ”<br>
{{a|devil|<center><youtube>https://www.youtube.com/watch?v=8PlLCKW4zuY</youtube><br>The awesome power of hindsight.</center>}}{{Quote|'''[[JC]]''': [''Winding down a typically rambling rant''] “... so, I ask you: why have we been so ''bad'' at stopping catastrophic risks from happening? Leeson, [[LTCM]], [[Amaranth]], [[Enron]], Global Crossing, Kerviel, [[Madoff]], Bear Stearns, [[Lehman]], [[LIBOR]], [[Theranos]], London Whale, Mossack Fonseca, 1MDB, Wirecard ... ”<br>
'''Middle manager''': [''interrupting'']: Simply put, we were not [[proactive|proactively]] looking for it. We were not using [[data]] properly to evaluate risk. To add value as an [[Inhouse lawyer|in-house legal]] function we need to use [[Innovation|innovative]] tools to crunch data, proactively spot emerging risks and escalate them to business.”}}
'''Middle manager''': [''interrupting'']: Simply put, we were not [[proactive|proactively]] looking for it. We were not using [[data]] properly to evaluate risk. To add value as an [[Inhouse lawyer|in-house legal]] function we need to use [[Innovation|innovative]] tools to crunch data, proactively spot emerging risks and escalate them to business.”}}
 
Bullshit. Bull — ''SHIT''.
On every disclaimer any [[financial services]] firm has ever sent — and ever ''will'' send — however paranoid, overblown, absurd, weird or wonderful, there will be one constant, ringing reminder: one thing, which, above all the other 
 
===A cold night in Vienna, 1808===
===A cold night in Vienna, 1808===
On a freezing night December 1808, about 1,500 people attended an ''akademie'' concert at the ''Theater an der Wien'' in suburban Vienna. The programme was to be four hours long, during which a young composer from out of town<ref>Bonn, in northwestern Germany — a long way from the cultural capital of the Austrian Empire.</ref> would be debuting a number of works.  
On a freezing night December 1808, about 1,500 people attended an ''akademie'' concert at the ''Theater an der Wien'' in suburban Vienna. The programme was to be four hours long, during which a young composer from out of town<ref>Bonn, in northwestern Germany — a long way from the cultural capital of the Austrian Empire.</ref> would be debuting a number of works.  
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This is the human condition, summarised. Only  ''once it has happened'' — [[past tense]] — and often, only months or years after that, can we ''possibly'' apprehend the significance of unexpected events.
This is the human condition, summarised. Only  ''once it has happened'' — [[past tense]] — and often, only months or years after that, can we ''possibly'' apprehend the significance of unexpected events.
===The category error: providing for the future by reference to the past===
This is where my friend the middle manager makes his [[category error]]. [[Data]] all come from the same place: [[Past results are no guarantee of future performance|the past]]. When we review risks, catastrophes and step changes; when we consider [[punctuated equilibrium|punctuations to the equilibrium]], fair or foul our wisdom, our careful analyses, our sage opinions, our hot takes, our [[thought leader]]ship — ''all'' of these are [[Second-order derivative|derived]] from, predicated on, and delimited by [[data]] which, at the time the event played out, ''we did not have''.


This is where my friend the middle manager makes his category error. Data all come from the same place: the past. When we review risks, catastrophes and step changes; when we consider [[punctuated equilibrium|punctuations to the equilibrium]], fair or foul our wisdom, our careful analyses, our sage opinions, our hot takes, our [[thought leader]]ship — ''all'' of these are [[Second-order derivative|derived]] from, predicated on, and delimited by [[data]] which, at the time the event played out, ''we did not have''.
And herein lies the tension and profound dilemma of the received approach to modern legal practice. For we commercial lawyers are charged with anticipating ''the [[future]]'' and but sent out to battle armed with a methodology drawn exclusively from ''the [[past]]''. Just occasionally, this [[dissonance]] rears up and hits us: the financial controller who must hold capital against shortcomings in a contract documenting a transaction that has already matured — a risk that has not come about, even though the reporting period rubles on: the formal imperatives of [[legibility]] taking priority over the logic of common sense.  


And herein lies the tension and profound dilemma of the received approach to modern legal practice. For we commercial lawyers are charged with anticipating the future and provided with a methodology drawn exclusively from the past. Just occasionally this dissonance rears up and hits us: the financial controller who must charge capital to provide for shortcomings in a contract documenting a transaction that has now matured: the formal imperatives of [[legibility]] taking priority over the logic of practical common sense.  
It is a persistent frame: by the time we get around to analysing any catastrophe and how it played out, all circumstances are known, all options have crystallised and all discretions have hardened. The employee who, with imperfect information and in the fog of war, tacked to ''starboard'' when hindsight revealed a safe harbour to ''port'' finds {{sex|himself}} short an very ugly option which those with executive responsibility for his performance will be mightily tempted to exercise. This is the lesson of {{fieldguide}}: we blame the [[meatware]], because it exonerates the executive.


It is a persistent frame: by the time we get around to analysing the catastrophe and how it played out, all circumstances are known, all options have crystallised and all discretions have hardened. The employee who, with imperfect information and in the fog of war, tacked port when hindsight revealed a safe port to starboard is short a very ugly option. Those with executive responsibility for his performance will be mightily tempted to exercise it. This is the lesson of {{fieldguide}}.
What caused the catastrophe — an inquiry one can only launch upstream — forms, informs, and reforms the ''down''stream narrative. Take [[Madoff]]: now we have the book, the film, the exposes, the fabulously gruesome congressional committee hearings everything about ’s investment strategy now is obviously bogus. There can be only one explanation: someone was asleep at the switch — someone further down the chain. This is where the historian’s perspective is more useful than the [[thought leader]]’s. We know Madoff’s regulators were not asleep at the switch because we have {{authorHarry Markopolos}}’s testimony that he kept prodding them in the ribs and pointing out exactly the anomalies they should have, the now agree in hindsight, been alarmed by.  


What's the catastrophe forms comma informs, and reforms the narrative colon everything about meadows investment strategy now is obviously bogus. There can be only one explanation colon someone was asleep at the switch someone further down the chain. This is where the historian’s perspective is more useful than the [[thought leader]]’s. We know Madoff’s regulators will not asleep at the switch, because we have Harry markopolos testimony of the number of times he told them about exactly the anomalies they should, in hindsight, have been alarmed by.  
it wasn't that the operators were asleep, that is to say, but that ''their switch didn’t work''. But a maladroit switch is the responsibility of the executive, not the worker.


it wasn't that the operators were asleep, that is to say, but that their switch was not fit for purpose. But a maladroit switch is the responsibility of the executive not the worker.
As of January 2021, we have an opportunity to see this [[dissonance]] live, in the wild, before it to ossifies into wise hindsight, with the [[GameStop]] phenomenon. Here, “lack of attention to data” is less plausible even than usual because the putative “victims” — [[hedge fund]] industry titans: tiny violins, right? — had arguably more [[data]], and more ''data-processing capability'' at their disposal than ''anyone in history''. Their opponents, a rag-tag aggregation of retail deplorables coalescing around a Reddit channel, had the [[network effect]] and the wisdom of crowds in their corner, but nothing like the computer horsepower nor institutional support of the funds they took down.  


as of January 2021 we have another opportunity to see this distance before it to ossifies into wise hindsight, with the GameStop phenomenon. here the lack of attention to data is far less plausible than usual, because the putative victims of this situation had more data and more data processing capability at their disposal and possibly anyone in history. the opponent's, and aggregated bunch of retail investors coalescing around Reddit had the advantage of the network effect and the wisdom of crowds but nothing like the processing capacity or institutional support of the hedge funds whom they took down. a failure to crunch data was not the problem here. The problem was a failure of the narrative. Part of that narrative is, of course, the primacy of data. [[In God we trust, all others must bring data]].
''A “failure to crunch data” was not the problem here''. The problem was ''a failure of narrative''. Part of that failed narrative was ''the primacy of [[data]]''. [[In God we trust, all others must bring data]]. But will ''that'' be the lesson we all learn from this debacle? Like the certain death of a bricks-and-mortar company with an irretrievably broken business model, don’t bet on it.  


It is interesting to that when executives appeal for change, for Revolution, for a new way of working they focus not upon on the revealed failings of their own narrative — it's got them where they are after all so it can't be all bad — but is upon the in constant performance of those at the switch. To these people the idea that the switch isn't working, and the hierarchy supporting that's which is not fit for purpose, somehow fails to occur.
It is interesting to that when executives appeal for change, for “[[revolution]]” — ironic, I know, but I’ve seen it happen — for “a new way of working” they are not talking about the revealed failings of their own narrative — it's got them where they are, after all, so it can't be ''all'' bad — but is upon the inconstant performance of those mortal, expensive, fallible [[Meatsack|meat-sack]]s snoozing away at the switch. Thanks to overwhelming [[confirmation bias]] the idea that ''the switch isn’t working'', and ''it’s the hierarchy supporting the broken switch that is not fit for purpose'', somehow fails to occur.
{{sa}}
{{sa}}
*[[Signal-to-noise ratio]]
*[[Proactive]]
*[[GameStop]]
*[https://www.youtube.com/watch?v=8PlLCKW4zuY The SEC [[general counsel]] trying to plead executive immunity from testifying before Congress]
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