Why risk management is so hard

I finally found someone who perfectly summarizes my awful experiences in risk management. Michael Lewis, in an article in Vanity Fair magazine, says “People are really good at responding to the crisis that just happened, as they naturally imagine that whatever just happened is most likely to happen again. They are less good at imagining a crisis before it happens—and taking action to prevent it”.

My experience goes farther — undertaking the academic exercise of imagining different variants of previous crises and hypothesizing unique scenarios … you get told you’re going down a rabbit hole. Wasting time. Talking about such an unlikely set of circumstances.

That’s the point! If it were a likely set of circumstances, then it would have happened already. Or there’d be mitigation in place already to prevent it. Shoving a bunch of explosives up your bum and greeting some head of state was absolutely crazy … until someone tried to do it.

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