Gustavo Ballvé on November 11th, 2010
Corporate Strategy, Food for thought, Home, Mental models, Portfolio Management, Risk management

James Surowiecki (of “Wisdom of the Crowds” fame) has recently written an article called “Back-office blues” at the New Yorker magazine. It highlights – once more – the importance of minding the shop, or in our case, making sure we really know what in the world we’re doing. It’s amazing how many times we’ve seen institutions go bust because of backoffice details. In this article’s case, there are many anecdotal evidences that the opposite of what the article focuses on is also happening: many people defaulting and not being executed.

NEVER underestimate the relevance of knowing every nut and bolt of every transaction, of making sure the deal is closed every step of the way. That costs money and time, but it is something one should always take into account. Ultimately it’s all about studying a lot, knowing a lot and doing as little as possible. As we like to say, risk management is really about so much more than greek letters…

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