Fooled By Black Swans
Imagine you are presenting to the board about risk management. The presentation is going well, and you are about to finish up when a board member stirs. He hasn’t said a word the entire meeting, so this is his chance to look smart. He asks “What are you...
List Of Risk Management Failures
Those who cannot remember the past are condemned to repeat it. Nowhere is George Santayana’s famous admonition more applicable than in the field of risk management. As a reminder of all the ways things can go wrong, I maintain an informal list of prominent risk...
What The 4 T’s Overlook
If you have been active in risk management for a while, you have probably heard of the 4 T ‘s. These—at a very high level—are the four possible responses to risk. Conveniently, each begins with the letter T: Tolerate Treat Transfer Terminate They appear in...
Nickels In Front of Bulldozers
There is an old saying on trading floors: Watch the trader who makes consistent money. He is the one who is going to blow up. In his book When Genius Failed, on the 1998 failure of hedge fund Long-Term Capital Management (LTCM), Roger Lowenstein shares a compelling...
Locking Out Shareowners (For a Fee)
It is the most sinister development in finance since robo-signing of foreclosure documents: corporations locking shareowners out of their own annual meetings. The pretext is internet technology that supposedly allows shareowners to participate “virtually”...
Abolishing Corporate Personhood: Be Careful What You Ask For.
Following the Supreme Court’s landmark decision in Citizens United, calls for the abolition of corporate personhood have multiplied. Noam Chomsky, Al Gore and Ralph Nader are advocates. Occupy Wall Street protesters mention it as a possible demand. Move to Amend...
This Is What Democracy Looks Like.
Yesterday, I headed over to Dewey Square for my first visit to a local outpost of Occupy Wall Street. They call themselves Occupy Boston. I found more than I expected, and less. The closely spaced tents are a cacophony of colors, nestled among office buildings. To one...
How To Steal a Corporate Election
There are plenty of ways to steal an election. Some require guns. Others depend on bribes. Perhaps the simplest involve misleading ballots. For its corporate election this year, American Tower Corporation (AMT) has produced a humdinger. Item 04 of their ballot...
Test Your Risk Intuition
I am dusting off a classic test for risk intuition. If you remember the test from years past, it will be nice to reminisce. If not, take the test now to assess your intuition and look at risk in a new way.