When Clever People do Silly Things with Money

Many years in investment banking taught McGill University Professor Gregory Vit that risky decisions ‘happened’ far more frequently than they were thoughtfully ‘made’.

We asked Professor Vit about this and his new book 'The Risk in Risk Management' in which he addresses risk management in financial organizations.

What prompted you to write this book?

Over many years as an investment banker, I observed that many important decisions regarding big risks "happened" rather than were "made". So decision-making regarding risk is sometimes a misnomer, decisions oftentimes "form", rather than are "made". By this I mean that banks pretend to be able to control many things but oftentimes get hit by Tolstoyan waves of history and social processes. What is even more interesting is that even the things that banks can control, should control, such as trading rooms and large credit exposures, oftentimes go badly off the rails because banks decouple thought from action.

Read full interview: Routledge