Frankly, nothing new here but the telling — in this past Sunday’s New York Times Magazine Joe Nocera tells a fascinating story of the self-inflicted blindness of risk management approaches by the investment banking community.
Three observations from this article:
1 — When the chance of a catostrophic risk within your planning horizon is less than 1%, do you need a longer planning horizon?
2 — If everyone in your industry is using the same risk model, doesn’t it mean that everyone is susceptible to the same unforeseen risk?
3 — Do you really want a risk model that pushes the worst risks to face your business to less than 1%?
It seems the investment bankers were not managing risks at all. Instead they were taking courses of action that supposedly led to low risks with high gains. I’d suggest that life’s experience tells us there is no such thing.
Read Complimentary Relevant Research
Predicts 2017: Artificial Intelligence
Artificial intelligence is changing the way in which organizations innovate and communicate their processes, products and services. Practical...
View Relevant Webinars
The Education CIO Challenge: IT Is a Team Sport
This video will outline key Education CIO challenges and recommendations based on business and technology trends in education as well...
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes, with attribution to Gartner. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.