> To protect the leadership. It's called the musical > chairs theory of unaccountability. > > Ian
Hey Ian, In the world of finance, what you said is called "saving ass" or "ass saving", depending on which one you like more. If you are someone with some authority and have those below you with lots of responsibility, whenever there is a screw up, you can try to point fingers at them to save your own "ass". This is why it is called "ass saving" in those circles. It doesn't work forever though. At some point, the unit you are in charge screws up so badly that a security guard escorts you to the door, as I have witnessed many, many times. Here is a fictitious story which covers not just "ass saving" but also one reason why most financial corporations loved this thing called out-sourcing: Suppose, for whatever reason, the executives of a firm that manages about $360 billion decide to install an enterprise wide risk management system. Actually we know: they want to monitor their portfolio managers, so that they can point fingers at them when there is a screw up. Now, consider a Managing Director of Information Technology at this firm. As an Information Technology Managing Director, suppose that this person has no idea about "modern portfolio theory", so-called Litterman decomposition, Value at Risk and cannot even tell the difference between say duration and maturity of a fixed income asset, which means she knows nothing about risk management. Further, she knows nothing about stochastic processes, term structure models, option pricing, CAPM and all that garbage either, which makes her a complete idiot in the eyes of those who know about that stuff, like myself, that is. So, she hires first, say, Reufers, a very respectable firm, of course, but no less idiots than her as far as risk management goes, as consultants to manage the installation project and naturally they screw up, say, after a year. By firing them, she saves her "ass" but since she is still in trouble, she this time hires, say, IBN, another respectable firm, of course, but no less idiots than her as far as risk management goes, as consultants to manage the installation project and naturally they screw up, say, after a year. By firing them, she saves her "ass" once again but since she is still in trouble, she this time hires, say, Orakle. Do you think she can survive if Orakle screws up too? And this fictitious story ends with me saying that I had seen her escorted out by a security guard, after Orakle screwed up. For your information, in this fictitious story, the first two of the firms mentioned were there, that is, Reufers and IBN. By the way, IBN consultants cost this particular money management firm from $2500 to $5000 daily, depending on their seniority, or, should we say, stupidity. Best, Sabri
