Risk Management

Once in a while, I will discuss some topics that are not totally related to the digital transformation of wealth and asset managers. This is one, even if I could argue that a digital transformation cannot be run without taking and managing some risks.

If we want to talk about risk, not many activities are more dangerous and relevant than mountain climbing. Jimmy Chin, an American professional mountain athlete, photographer, film director, and author, discusses risk management in the context of climbing at a Goldman Sachs talk. 

The first element he brings in is embracing failure, especially since there are a lot of failures in climbing. Their first attempt to climb Meru Peak (a mountain in the Garhwal Himalayas) failed. On their way down, they were already making decisions about things they had to change for their next expedition, like being lighter and taking warmer sleeping bags.

A second element is embracing the process, managing the variables you can control, and identifying those you cannot control. By embracing the process, you will focus on everything you need to get together to succeed, not only on the ultimate goal (in Jimmy’s case, reaching the summit.) That’s how you get there.

The third element is fear, which can be healthy, as it helps sharpen senses and motivates. Fear is not helpful when it becomes paralyzing or turns into panic.

Not surprisingly, a key component in risk management is anticipating all the potential problems that can emerge and having pre-defined solutions. When a risk materializes, taking stock of the situation and identifying the perceived and actual risks are essential. And really focusing on the actual risks.

Jimmy also brings the notion of trust and understanding how people function in different situations.

Reference:
Listen to the talk. There is much more there. Goldman Sach, Jimmy Chin talk: https://www.goldmansachs.com/insights/talks-at-gs/jimmy-chin.html