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Greater Evilism

By Al Schumann on Wednesday April 8, 2009 09:14 PM

The public good, in Democratic Party philosophy, is defined by the famous "three bowls of hypothetical porridge" method. The middle bowl is defined by what's not in it, as that relates to the other two, which for the purposes of defining the middle bowl are represented as repositories of what's not in them either. In this way, a happy medium is achieved. If that doesn't make any sense and is highly irritating, don't worry. Everything is fine. You're a decent person. If it does make sense, and you can see a thesis, you're eligible for high standing in this crackpot blight on the humanities. You're also a bad person.

I mention this as an introduction to trends in risk management, and as a follow up to Owen's post on shafting the investors who are small enough to fail. Sometimes they get an additional push.

The global financial crisis should have prompted financial institutions to focus on risk management, but according to new research sponsored by SimCorp, risk management has lost status within organisations and is not being treated as seriously as it should be.

The research has been undertaken by the recently-established SimCorp StrategyLab in cooperation with The Nielsen Company and suggests that the number of risk managers actually reporting to boards has been dropping.

The research revealed that since 2007, the number of organisations that had the risk management function reporting to the board of directors had dropped by 5 per cent, from 36 per cent to 31 per cent.

The director of SimCorp StrategyLab, professor Ingo Walter, said much had been learned about the failures of risk management during the current financial crisis and it was therefore disturbing that the survey had indicated some institutions were moving in the wrong direction.

Institutions losing sight of risk management priorities -- I think that's supposed to be funny, not sure.

Why manage risk when you can not only get a bail out, but you also get to redefine risk according to metrics that are as empty as the three hypothetical bowls?

Comments (6)


I take it the practice of "risk management" mainly originated in the need to make the really wild and crazy new investment vehicles sound plausible and safe. No need for that department anymore. . . but there are plenty of jobs in the new Department of Illiquid Assets Re-packaging.

Al Schumann:

That's about the size of it. There are actual models and studies of risk that can, theoretically, be applied to finance. But no one likes what they have to say, starry-eyed punters least of all. The people who definitely should be required to use them, under the threat of prison, wholesale expropriation and permanent blacklisting, make hyenas on a carcass look like an Alphonse and Gaston routine. Their wannabes are inveterate chumps for the hyenas.



"wait wait, listen to carl's story"

"about the--"


"well it's true, during the boom years, i had a weekly gig as a risk manager"


"i'd go to big meetings of a couple different banks, wearing a wig at one and a mustache at the other"

"for what?"


"no i mean, what were you doing?"

"they had me do slideshows, charts, formulas, i never understood it, they even wired me for Q&A"

"i wonder why"

"me too, a lot of the questions were planted"


as usual nibbles the nub
like a wild creature of the enchanted forest

let me mack truck it
for the lint heads like me

the scale game was a dog and unicorn show
from jump street
the quants and their ring masters
were interchangeable frauds
like the back drops for a school play

i'd just add
not only were questions planted
in these top shelf musters
fuck i bet
even the plants were planted

ghouls don't always recognize each other

no one tell
like the pinky finger on the invaders
no shades that reveal
like the ones in they live

best do it bin laden style

take out the whole building


the only partly still open question
did any hyenas lose here ??

or was the uncle putz put air tight from jump street
given the reagan-clinto-doublebush era with its series
of bubblicious prequealizers

Al Schumann:

I would say they didn't. Their access to the power of privileged allocation remains the same. Their landing is soft, relative to everyone else's and in an absolute sense too. That risk was managed.

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