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“I wasn’t even trying, like, I wasn’t spending any time or effort trying to manage risk on FTX,” Mr. Bankman-Fried said in an interview. Echoed a co-head of digital asset trading in Citigroup about FTX, “The thing that I picked up on immediately that was causing us heartburn was the complete lack of a risk-management framework that they could articulate in any meaningful way.”
Bankman-Fried has been quoted as saying he was “risk neutral.” Yet he conceded at his trial when asked, “Mr Bankman-Fried, did you make any mistakes along the way?”: “By far, the largest mistake was we didn’t have a dedicated risk management team.”
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But how could FTX not have risk managers? To live is to manage risk.
Risk and risk managers existed long before risk management frameworks had been formalized. Think of how Christians operated in the 300 years between the time of Jesus up to formalizing the Scriptures in 4th century AD at the Council of Nicaea. Can we think of Bank-Friedman and his FTX colleagues in the same way as these early Christians? What kind of really-existing risk management occurred (occurs) in the absence of risk management scriptures?
No wonder the guardians of current frameworks might want to convince us the FTX debacle has nothing to do with them.
WHEN COMPLEX IS AS SIMPLE AS IT GETS 