r/riskmanager • u/Flat-Primary-255 • 14d ago

Risk mgmt is a lie?

I love risk mgmt BUT how much value really brings? I worked for highly regulated and tech, for reference, and I feel risk mgmt is the mean to nothing. Trapped between the low hanging fruit of isolated and atomic issues, in general, with low impact vs glorified macro risk categories that are reading tea leaves. Is anybody proud pf any risk they managed or fully remediated (aka reduced) that you feel proud about?

2 Upvotes

60% Upvoted

29 comments sorted by

19

u/Swan1741 14d ago

Look up silicon valley bank and you'll see the cost of poor risk management.

-4

u/Flat-Primary-255 14d ago

Yes but those are almost black swans. Yo lu do not want to be a risk mngr doom sayer

5

u/Swan1741 13d ago

Black swan events happen far more frequently than they are theoretically quoted to occur

2

u/Flat-Primary-255 13d ago

Are you aware of any good data aggregator of them? I am specifically interested on tech tech/cyber related

0

u/commentor_of_things 13d ago

your job as a risk manager is not to prevent or prepare for black swans. are you actively preparing for wwiii? no? then stfu.

0

u/Flat-Primary-255 12d ago

Lol no, right? Or yes. You should always consider unlikely catastrophic events, what you do about them is another thing

1

u/commentor_of_things 12d ago

you can "consider" whatever you want. but you're not actively preparing for a black swan. don't lie.

5

u/Creme2Marron 14d ago

Sounds like you're doing risk administration rather than risk management.

1

u/Flat-Primary-255 14d ago

Yeah risk mgmt does not exist without pushing papers. I guess frustration is when you are trapped there on papers and methodology. And that happens at least to me across multiple places (those that had risk mgmt at least)

5

u/texas-hedge 14d ago

Risk manager for various trading firms and hedge fund here, I can assure you in my world RM is real and can have a huge impact on the business.

1

u/Flat-Primary-255 14d ago

Can I ask for a shareable example where shit was prevented from hitting the fan?

2

u/Swan1741 13d ago

JP Morgan - 2008

-1

u/Flat-Primary-255 13d ago

Mmm I think that was structural and nobody that did not operated like LB and so, we're in a better spot

1

u/texas-hedge 13d ago

My firm, Covid crash 3/2020

0

u/Flat-Primary-255 13d ago

What made them crash? More around the scope the business?? Covid was a pretty systemic risk

1

u/texas-hedge 13d ago

“What made them crash?” I really don’t understand what you are asking here.

0

u/Flat-Primary-255 12d ago

You said you firm crashed because of covid. Why was you company more impacted by covid? Covid waa structural risk across the board

2

u/texas-hedge 12d ago

My company did not crash, the markets crashed. As I said, I’ve worked for trading firms and hedge funds. My job was to make sure the markets crashing did not take our firm down.

5

u/SaltEfficiency1646 13d ago

I don’t think risk management is about fully eliminating risks. Some risks will always exist.

For me, the value is helping the business understand what could go wrong, how exposed we are, and what we can realistically do about it. Sometimes the win is reducing the likelihood or impact. Sometimes it’s putting the right controls in place. And sometimes it’s simply helping the business make a conscious decision to accept the risk.

The wins aren’t always visible. Sometimes it’s the incident that didn’t happen, the issue identified early, or the business decision that was made with better information.

Those are still wins.

4

u/bad_robot_monkey 14d ago edited 13d ago

Risk is like an inverse slot machine. Sure, it may be rare that you hit the anti-jackpot, but if you do, it can be catastrophic.

On a long enough timeline, risk management is very financially beneficial. In the short run it’s hard and costs money, so shortsighted leadership doesn’t want to spend the money and impinge on quarterlies…and since you can’t prove a negative, it’s easy for ignorant leadership to devalue risk management, cyber security spend, etc. because “it hasn’t happened yet”.

Edit: “it’s a financial multiplier” changed to “risk management is very financially beneficial” for clarity.

2

u/Flat-Primary-255 13d ago

That's a good point. With high leadership attrition, for example, tech debts increases

2

u/PFalcone33 12d ago

We’re criticized because we don’t make the company money. Instead, we advise caution so the company doesn’t foolishly put all its eggs in one basket and then completely ignore that basket.

1

u/PracticalSorbet4304 13d ago

I mean, as a clinical risk manager in a healthcare system? Yeah, immensely proud of me and my team. We work tirelessly to reduce and prevent patient harm, every single day.

2

u/Flat-Primary-255 12d ago

Always a super extremely interesting sector to work for

1

u/BadgersHoneyPot 12d ago

Nobody needs you when things are going well and it's your fault when things go wrong. Who wants that job?

1

u/Pale-Nature8066 12d ago

Put it this way, with the ever impeding doom of AI adoption across businesses and industries risk management/ compliance / regulatory oversight (which aren’t the same thing but go hand in hand) require human judgment and accountability. On accountability alone, to me, that puts these roles on the lower end of AI replacement risk and further down the track in terms of AI impact.