by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
Autopilot is fantastic. It greatly reduces pilot error in flying a plane, and reduces the overall risk of flying. Except when there is a crisis – a hole in the roof, a flock of birds making a Hudson River landing necessary, a medical emergency on board which means landing at a different airport etc. etc.
The point about autopilot is that it is great when things are going as expected (and even for the mild unexpected). Autopilot does reduce errors, mistakes and items that might otherwise get overlooked. However autopilot is not for emergencies, or for when things are abnormal.
This raises the issue of whether or not your firm’s risk controls work on autopilot. Are they so successful in normal conditions that they get trusted to act in abnormal conditions? Who in the firm has the authority to override them? How is an override decided upon? All good questions to answer before hitting a flock of birds.
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