seidu
Member
This may interest forum members
http://www.risk.net/operational-ris...at-brexit-teaches-operational-risk-management
Thanks
Seidu
http://www.risk.net/operational-ris...at-brexit-teaches-operational-risk-management
Thanks
Seidu
Receptiveness: don't rule out the unlikely
I never thought Brexit would happen. I trusted the bookies, distrusted the opinion polls and was convinced the old populist arguments for protectionism and curbs on immigration would seduce only a minority. I wasn't alone in being wrong, but I was wrong. I was so convinced of a 'remain' vote that I didn't prepare for it.
One of the companies I work with, a French financial firm, felt similarly. Its risk management department prepared nothing except a vague internal note on Brexit – and only then because it was encouraged to do so by the European Banking Authority. On the morning of June 24 it appeared unprepared, with no contingent communication to offer its clients.
Not everybody was so blind or so careless. At the other end of the spectrum, a UK-based firm I have worked with closely didn't leave anything to chance. The firm, which is active in foreign exchange markets, didn't expect a 'leave' outcome any more than I did, but the chief risk officer and his team made sure to prepare for every possible market scenario, no matter how remote it looked
The 40 traders and risk managers who spent the evening of June 23 at their desks did not waste their time. Many stayed up for more than 30 hours in a row. What happened exceeded all their expectations, but did not reach their worst-case scenario either, and the firm actually did very well that night.
That firm and its chief risk officer taught me a risk management lesson: don't ever let your personal convictions come in the way of prevention and contingency. Be open-minded and receptive to others' ideas and opinions when preparing for the future, however unlikely or bizarre they might seem. Life is vastly unpredictable, and human minds are particularly ill-equipped at predicting future events, so be humble in your forecasts.