a) the risk can be neatly packaged and mitigated
b) the cost of appropriately mitigating that risk wouldn't preclude running the business.
Long tail risks exist in every business, that rare event that takes the whole thing down. There are tons of them.
Each of which has a .00001% chance of happening.
The consumer brand version of this having one of your employees say some stupid shit in at bar (on video) or the summer intern like the wrong tweet, at which point a woke mob descends upon your brand with pitchforks at the ready....
There is no practical way to mitigate this. You can do the basics (don't hire assholes) but it's open season from there.
I've always thought the most thankless job in the world is running HR or PR at a massive retail company like Wal-mart or Macdonalds. You're one redneck idiot away from being on the national news (for doing or saying something most reasonable humans would never dream of) and you have literally hundreds of thousands of these people showing up for work each day.
At which point, you get the soul crushing task of getting on national television to explain the conduct of the moron in question and explain how it doesn't represent some embedded policy of the company to encourage <bad thing>. Better yet - you get do this every couple of months, since you have hundreds of thousands of these morons. Statistically, it becomes a predictable process.
> Each of which has a .00001% chance of happening.
More to the point, you're in a dog eat dog world, and for most of those dogs this 0.00001% chance won't happen in the lifetime of the firm. So they don't spend money on mitigating it, which gives them a competitive advantage over every dog that does spend the money.
Spend money on enough 0.00001% things, and they will grind you into the dust. Locally the way out is legislation that evens that playing field by forcing everybody to spend that money. But you can't control low cost overseas producers in that way.
a) the risk can be neatly packaged and mitigated b) the cost of appropriately mitigating that risk wouldn't preclude running the business.
Long tail risks exist in every business, that rare event that takes the whole thing down. There are tons of them.
Each of which has a .00001% chance of happening.
The consumer brand version of this having one of your employees say some stupid shit in at bar (on video) or the summer intern like the wrong tweet, at which point a woke mob descends upon your brand with pitchforks at the ready....
There is no practical way to mitigate this. You can do the basics (don't hire assholes) but it's open season from there.
I've always thought the most thankless job in the world is running HR or PR at a massive retail company like Wal-mart or Macdonalds. You're one redneck idiot away from being on the national news (for doing or saying something most reasonable humans would never dream of) and you have literally hundreds of thousands of these people showing up for work each day.
At which point, you get the soul crushing task of getting on national television to explain the conduct of the moron in question and explain how it doesn't represent some embedded policy of the company to encourage <bad thing>. Better yet - you get do this every couple of months, since you have hundreds of thousands of these morons. Statistically, it becomes a predictable process.