The latest report of the Global Risks Network at the World Economic Forum is just out – here it is if you fancy a look. The report begins with the words:
Over the last year, a series of risk issues – from the liquidity crisis in the financial markets to the emerging concerns over the long-term security of food supply – have focused global attention on the fragility of the global system.
So it is a pleasant irony indeed that one of the sponsors of the report is none other than – Citigroup!
Nor does the irony stop there. Last time the Global Risks Network met in London, on 10 July, the participants (of whom David and I were two) were treated to a quite fantastically complicated presentation by two Citigroup staff – the gist of which was “innovative financial instruments are great because they reduce risk in the global financial system”.
Who knew? And it gets better still.
For as you’ll all recall, 10 July is of course the very same day that then-CEO of Citigroup Chuck Prince made his infamous comment in the FT that
When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.
Oh dear. A couple of us did ask the Citi staff at the time how their sophisticated presentation on risk management squared with their boss’s snappy dance moves; but hey, benefit of hindsight and all that. As the introduction to the WEF report continues,
Under conditions of global stress, one core questions of global risk management will become more salient than ever: who owns the risk?
How true, how true – and never more so than in the case of all those pesky CDOs that Mr Prince has left us with. Anyway, the report is excellent, and well worth a look.
