Risk management in a sea of unknown unknowns

“There are known knowns…[and] known unknowns. But there are also unknown unknowns.” Donald Rumsfeld was referring to Iraq and WMDS, but the last part of that quote, about the things we don’t know we don’t know, could just as easily apply to risk management today. Uncertainty abounds. To deal with it, agility, and resilience, will be critical. As will an understanding of the redistribution of risk exposures in the tails. Only then can financial institutions develop baseline and contingency plans to mitigate current risks, succeed with their growth objectives, and avoid producing hidden pockets of risk in future. After all, the last thing you want to end up experiencing is the tail wagging the dog. For more, check out Alla Gil’s latest column for the Global Association of Risk Professionals (GARP) here.