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All right, but it's difficult to disagree with a tautology. If the answer to how we trade well is not to trade badly, then the situation truly is dire. You speak of it in pejorative terms, but to my mind what "risk management" is missing, precisely, is the ability to manage failure. It's a very old kind of hubris to believe that any expedient--whether it's more power in the hands of risk managers, or more in the hands of traders--can categorically prevent a Bear, a Lehman, and so on. The question to address, I think, is not how to prevent such a circumstance from arising, but how to act when it inevitably does.
All right, but it's difficult to disagree with a tautology. If the answer to how we trade well is not to trade badly, then the situation truly is dire.
You speak of it in pejorative terms, but to my mind what "risk management" is missing, precisely, is the ability to manage failure. It's a very old kind of hubris to believe that any expedient--whether it's more power in the hands of risk managers, or more in the hands of traders--can categorically prevent a Bear, a Lehman, and so on. The question to address, I think, is not how to prevent such a circumstance from arising, but how to act when it inevitably does.
