Risk Management and the Financial Crisis: Why Weren’t We Protected

Risk management can be a thankless profession. In bull markets, risk managers are often viewed as wet blankets who, as some might say, “take away the punch bowl just when the party starts getting interesting.”1 Upon a turn for the worse, people wonder why they weren’t warned earlier. Even when successful risk managers limit losses, their recognition is somehow lacking. Maybe it’s the loss aversion baked into our psychology, but it can be difficult to find comfort in situations that are merely bad, rather than terrible.

Keywords: Enterprise Risk Management