Who is deluding who in thinking we are reducing risk?

Today I enjoyed a game of golf with some past colleagues. These are people with whom I worked for over 10 years in a very successful financial organisation. They are seasoned professionals with a wise perspective on the world of finance.

Apart from golf, we exchange stories, reminisce a little and cover all sorts of topics. Today was no different. I spent some time with an old and much respected boss, one who was and is both very knowledgable and well connected.

During the day I received three different communications from another set of past colleagues, ones whose employment is at risk as an erstwhile capable organisation appears to be imploding. To me the way they are being treated is reprehensible, but in the current environment not surprising.

Earlier in the day my partner and I had been talking about how the industrial approach to managing enterprises; the slice, dice, measure and monitor that pervades enterprises' and the regulators' approach to management, was increasingly struggling to cope with the complexity and pace of the modern business world.

So with the later news, my golf partner commented how many executives are being forced to make poor decisions, maybe acting out of character, by the excessive capital requirements being imposed by regulators and triggered by outside events. His example was a bank that because of a downgrading is required to provide additional tens of billions of pounds of capital.

While the regulators may think that this reduces risk, but it feels like the start of a downward spiral and even if it is not, then it will catalyse other decisions and behaviours that may represent other different and maybe greater risks.

In trying to improve matters it feels as if we are just shuffling the cards with no real benefit and that unless we start to learn how to play the new game, by new rules we are just biding time until the system fails.

Hence the title of this post. Does no one else see it? Are we happy with a charade of smoke and mirrors and ineffectual action or do we have a voice and spirit to question and explore until we find what we need?



- Posted using BlogPress from my iPad