Blog Archives

The winding rivers of risk management

July 11, 2012
The winding rivers of risk management

In the novel Time and Again by Jack Finney, he writes about Einstein’s theory of time travel this way: “we’re mistaken in our conception of what the past, present, and future really are. We think the past is gone, the future hasn’t happened, and that only the present exists. Because the present is all we can see. It’s only natural. (Einstein) said we’re like people in a boat without oars drifting along a winding river. Around us we see only the present. We can’t see the past, back in the bends and curves behind us. But, it’s there.” Since risk…

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Risk of a short dead dude

July 6, 2012
Risk of a short dead dude

In celebration of La Fête Nationale, Bastille Day, on July 14 here is an example of some poor risk management on the part of the British. The late historian Robert Sobel once noted that the “British created a civil service job in 1803 calling for a man to stand on the Cliffs of Dover with a spyglass. He was supposed to ring a bell if he saw Napoleon coming. The job was abolished in 1945.” Since the “short dead dude” died in 1821 I find it incredibly unlikely that this risk would manifest itself between 1822 and 1945. Napoleon was…

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Confessions of a risk manager

June 27, 2012
Confessions of a risk manager

My 14-year old son recently bought himself a not-so-inexpensive bike with his own money. On the Monday after the purchase he wanted to take the bike to school. I advised against this as he had a pretty lousy bike lock. “C’mon, dad”, he replied, “who’s gonna steal my bike in this neighbourhood?” (After all, we live in the suburbs and not in the worst part of Toronto where ruffians often steal $500 bikes so they can buy drugs and iPhones.) “C’mon ______” is a routine response heard by many risk management professionals and fathers. Bad things happen, but they won’t…

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Campers, risk management and bears (oh my!)

June 26, 2012

There’s an old joke about two campers that are awakened by a hungry bear. The first guy yells ‘run’ but the second guy stops to put on his running shoes on first. The first guy asks if his companion really thinks that the shoes will help him out run the bear. To which the second guy replies, ‘no, I just have to out run you”. Sometimes risk management is the same way. You don’t have to have the best risk management system, just one better relative to the next guy.

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JPMorgan 24601

May 16, 2012
JPMorgan 24601

Many of us are familiar with Jean Valjean, the protagonist from Victor Hugo’s novel Les Misérables, made more famous in the 80s thanks to the musical of the same name. In the story, Monsieur Valjean is sent to a prison camp for stealing a loaf of bread: 5 years for the crime and 14 more for attempted escapes. Jump forward 200 years and people are no longer stealing bread but generating losses on a much larger scale for their financial institutions. Last year it was $2 billion and UBS and today it is $2 billion at JPMorgan (which appears to…

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You say risk management and I say shit management

May 3, 2012

I am always amazed that despite the enormous square footage of our planet and the tiny amount of poop produced by a bird that it is possible for my car to get hit. But it occurs despite how unlikely it would otherwise appear.   Shit happens.   We know this because history tells us it does. Shit happening is a universal truth. We do our best to live our lives and manage our businesses but the shit is always there. Look up or look down and it will be there. Call it bad luck, a black swan or an I-told-you-so.…

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Real Human Beings and the Elephant Man

February 29, 2012

Perhaps one of the most famous movie quotes from my childhood was from the 1980 movie ‘The Elephant Man‘ based on the life of Joseph (John) Merrick, a severely deformed man in 19th century London. At one point in the film Merrick cries out to an angry mob “I am not an animal! I am a human being! I … am … a … man!” After all, does it really matter what we look like, how much money we make, where we pray or who we cuddle up with at night? No, because we are all just human beings. Last…

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You don’t need to mitigate every risk: Tire edition

February 13, 2012

There’s a nail in the tire of my wife’s car. Rear driver side. Fat head pushed all the way in. It caught her eye on the weekend by accident while the car sat in the driveway. Tire pressure appears normal. Is this a risk? Since getting a flat tire could cause her to fail to meet her objectives – driving to work – then yes it is a risk. Did the risk just happen? Of course not. Everyone of us is at risk of getting a flat tire at all times. If the risk did not just happen then did…

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The Night’s Watch and the Wall of risk management

January 20, 2012

  In the series A Song of Ice and Fire which begins with the book A Game of Thrones, by George RR Martin, we are introduced to the Wall and the Night’s Watch. The Wall is an immense fortification on the northern border of the Seven Kingdoms that defends the realm from “what lies North of the wall”. It was created over 8000 years ago and measures 300 miles in length and 700 feet in height. The protectors of the Wall are a military order clad in black known as the Night’s Watch and they are as old as the…

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How to Make a Peanut Butter Sandwich: Norman Marks

January 19, 2012

  In my third instalment of this increasingly less funny series, we look at how popular auditor and blogger Norman Marks might make a PBJ sandwich. How to Make a Peanut Butter Sandwich: Norman Marks Add jam and peanut butter to bread. Perform a self-assessment to determine if that was actually peanut butter, jam and bread. Check off boxes. Ask Tim Leech if this is an adequate sandwich. Draft a new framework about how to make a peanut butter and jam sandwich. Solicit input on LinkedIn from others who like peanut butter and jam sandwiches. Publish findings in Internal Audit magazine.

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