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What are we missing in risk management?

Author

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  • Kloman, Felix

Abstract

This paper addresses five possible ‘blind spots’ in the current practice of risk management. These are: (1) the ‘divinity of the gods’ — the inability to criticise senior management; (2) the ‘rush of herds’ — the inability to project and predict mass delusions and hysteria; (3) ‘black swans’ — the failure of models to anticipate outlier events; (4) ‘the error of success’ — the human inclination to think that current success will repeat itself; and (5) ‘academic pomposity’ — the regression towards intellectual obscurity among academic writers.

Suggested Citation

  • Kloman, Felix, 2008. "What are we missing in risk management?," Journal of Risk Management in Financial Institutions, Henry Stewart Publications, vol. 1(4), pages 354-359, September.
    • Handle: RePEc:aza:rmfi00:y:2008:v:1:i:4:p:354-359
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    More about this item

    Keywords

    blind spots; executive pay; crowd behaviour; extreme events; behavioural economics; academic jargon;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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