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Description
Through practical, everyday observations with a light-hearted perspective, the "Risk Pearls of Wisdom" series will walk you through how to think about risk and how to measure outcomes. Such tools will allow you to understand the dynamics of how groups of people respond to risk situations, how greed and the fear of missing out amplify manias and pandemics.
Applying risk management (not risk elimination) techniques in everyday life will lead to a better understanding of the world around us, leading to a happier life!
Subscribe to the newsletter at https://riskpearlswisdom.substack.com/
Applying risk management (not risk elimination) techniques in everyday life will lead to a better understanding of the world around us, leading to a happier life!
Subscribe to the newsletter at https://riskpearlswisdom.substack.com/
113 Episodes
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Being a risk manager involves reading risk reports that provide the complex cold numbers but little else. Risk managers need to place the report into spatial and temporal context to understand where the market or world is in the"distribution". The podcast discusses how the world, in general, operates along with concentric cycles and also pendulums. Sometimes the planet passes a crossover point that snaps the current state to the opposite side of the distribution. I never said being a risk manager is easy.
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This episode discusses the physical nature of commodities notably oil and gas. The ultimate physical commodity is strangely power and has several here-and-now features. We discuss the introduction of renewables into the mix and a potential way forward using risk management as the anchor.
(Apologies to the Goddess of Rock, Patti Smith for the title taken from "People Have the Power")
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We start a new series by introducing KFC strategies to show how risk managers can talk to business heads and traders. The art is to avoid an "I win, and you lose" approach when discussing complex and charged topics such as evidence of excessive risk that requires a reduction strategy. Involves lashing one's boat to another and row together.
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The imminent default of the most indebted property developer, Evergrande, has triggered much debate amongst risk folk. Will there be spiralling of property prices started by dumping stock at fire-sale prices? Who is going to buy them? Are they catching a falling knife? The answer is that we do not know how things will unfold. We can only draw from history, consider other crises, and see if we can stitch together a stress test.
(Apologies to scholars of Nietzsche for this title)
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This episode of RPW looks at the unintended consequences of government officials telling an already skittish population "Don't Panic". We talk about how people can be rational, including risk managers, as we look at the human psyche that separates sensible micro-decisions that aggregates into panic-like crowd dynamics.
(Title is a tribute to the opening of Queen's Flash Gordon, de de de de de de de de de Flash a-ah)
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This episode covers the second climate change risk category called "Transition risk" faced by corporates who need to reduce their carbon footprint radically. It covers several concepts, including how ill-conceived policies can work against those ready to innovate and transition.
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A recent crisis in a company called Evergrande has prompted the age-old question of "how much is too much". The answer always involved look back at a seismic event and wonder why people did not see it coming. The answer is that they probably did, but who cares when there is money to be made.
(apologies to Babs S and her lyrics to Evergreen from A Star is Born)
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In the second on the RPW climate change series, we discuss the first CC risk factor that is Physical Risk. We discuss the policy-investment-resilience model used to reduce the impact of extreme weather conditions on housing, arable land and company assets. We take a history lesson on what happens when the national and geopolitical stage is weak and how they are susceptible to external shocks.
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This podcast provides a brief history lesson of the last invasion of the UK and the subsequent run on the banks. We talk about how banks provide the impression of solidity through architecture. With challenger banks without branches and the printing of money, what does the future of banks and payments look like?
(Apologies for the title that is copied from Monte Python's Holy Grail)
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The link below is the post mortem document penned by internal and external counsel. To say it is brutal is an understatement. It is thus required reading for any senior risk manager to pray this does not happen in their patch. In this podcast, we pick up on three keywords used: lackadaisical, perfunctory and holistic. May we all embed these in any risk manual.
(the title is a derivation of the Standard Foreign Office response in a time of crisis, stage 2. A favourite Yes Prime Minister dialogue, episode 6)
https://www.credit-suisse.com/about-us/en/reports-research/archegos-info-kit.html
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This podcast separates the code red narrative around climate from the need that cool heads now need to execute on a transition from fossil fuels. We counter the doom-mongers with a message of optimism through innovation that comes from action rather than rhetoric. We introduce the concept of Climate Change Risk that we will cover in the next two episodes.
(Apologies to the estate of Bob Dylan for lifting lyrics for the title from "the times they are a-changin")
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The RPW podcast has made it to its hundredth episode. To celebrate this milestone, we talk about a topic that has been a long time coming, and that is to articulate some thoughts and viewpoints on the risk of cycling in London. Without running a red light, obviously!
(Shout out to the late Freddie Mercury for taking lyrics from Ride my Bicycle)
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In part two of aggregation-disaggregation, we return to the story of CDOs and how risk that was supposed to disseminate ended up in the hands of a few. From there we talk about how regulators responded, switching to a centralised control model. The upshot is disaggregation as banks interpret dictates. We see similar challenges when governments switch away from values-based rhetoric to excessive rule-making.
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This episode covers one side of the aggregation-disaggregation dynamic that permeates most areas of finance, corporate and public life. We start with the art of aggregation of risk information that permeates from several trading groups so that management (who are far removed from the action) can make strategic decisions. This episode explains why a few notable banks do this well to avoid market corrections.
(With reference to The Graduate and the one word spoken to Dustin Hoffman was before I get corrective emails in the riskpearlswisdom@gmail.com inbox, is "plastics"...)
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This podcast uses a recent discussion on Quora on how newbies should do if they want to be successful trader on Bitcoin. With a recent 40% correction, this is the time for cool heads from those salty seadogs to settle the nerves of those nursing losses. We introduce another top 6 list of advice for newbie traders.
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In this podcast, we look at a possible explanation of how we ended up with the offering of a safe space in a SW London estate agent. The podcast starts with why asthma has tripled in the past fifty years and points the blame directly to the dark arts of marketing, media and government propaganda.
(with reference to the Fairy Liquid jingle used since 1961, "Now hands that do dishes can feel soft as your face
With mild green Fairy Liquid"
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This episode provides some introductory information on the credit markets, why is it so complex compared to equities and why a credit default swap is not a derivative. This brings RPW to the end of Season 8.
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This podcast considers how not to argue with Bitcoin evangelists as they clutch onto a self-evident truth of the value of the currency. From an axiomatic foundation, we expand the intellectual framework the puts rules around how we model surprise events so that they become explainable and thus no longer a surprise. This behavioural pattern is notable in mania but can be seen in most elements of human interaction. The problem is when there is so much invested interest in keeping the stable status quo, we are exposed to an unexplainable surprise. like financial bubbles, delusional bubbles can also burst with similar consequences.
(Title is ode to Monte Python and the Spanish Inquisition skit)
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People who do not make a living trading show similar behaviour characteristics to hypomania where they excitingly point out their prowess. With Bitcoin's recent retrenchment, the podcast discusses options on where the price can go from here and also whether hypomania of the crowd could lead to a hangover.
(the headline is an adaptation of "We're in the money" used in the 1933 film, The gold Diggers)
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This podcast compares the actions of the scientific community around the source of covid-19 to those by the medical profession when a physician noted the direct link between not washing hands and death in a maternity ward. Experts in their field never like outsiders asking simply "why" questions based on observations. Expertise is a club - you don't need to be a scientist to make a scientific discovery.
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