In 1999, Richard Bookstaber wrote a seminal article called Risk Management in Complex Organizations (Association for Investment Management and Research, March/April 1999). I must have read this article over 20 times over the last ten years (I keep a folder of seminal articles for my continued education). To a family, their goals and needs are complex and confusing. To an investment bank, their trading operation is a complex organization. Below are quotes for your consideration:
a) The paradox of risk management: “How can we manage a risk we do not know exists?”
b) “Precision and focus in addressing the known comes at the cost of reduced ability to address the unknown.”
c) “The root of the problem is not the complexity of the unseen risks. The unforeseen events turn out to be simple. The root of the problem is the complexity of the organization” in dealing with risks.
Bottom line: Risk management is about having options. Do you know your options?
Always Asking, Never Assuming™
Christopher Holtby
Tags: dallas, fee-only, financial advisor, financial planning, investment management, north texas, Risk Management, wealth management