elephants and coffee tables

i was stunned to hear AM try and educate viewers the other day on the business channel about risks. This is something i have a little background in myself, and he carried on about the confluence of a number of very unlikely events happening all at once and how much of a victim of circumstance he was...ARE YOU KIDDING ME , DIDNT HE LEARN A THING FROM PASMINCO, I just about choked on my cocopops here people

his explanation of rating risks was like poetry (as if we were all morons), you know risks have a probability of occurring and they have an impact in $, so you generally multiply the two in order to quantify that exposure, all good so far AM. BUT then he obviously didnt attend the second lecture or else slept right through it !!!

and this is where this company came unstuck like so many before it

once they quantified the risk they didnt do anything to mitigate it.

So if a risk is really big and is a significant one as reported in the risk matrix...ie this risk is BIG. then you need to mitigate it, you can transfer, remove, reduce the risk......ie through insurance, hedging etc etc.

so our brilliant leader understands how to measure risk but didnt have any idea what to do with it, its a bit like having an elephant in the room and continuing to use it as the coffee table....

so the confluence of 2 things

1. rapidly decreasing AUD v US
2. rapidly decreasing metals prices

both which can be mitigated by hedging and contracts

caused what he said was the final risk, but this is a result of the first two, not a risk that couldnt be avoided.

3. selling prime assets at fire sale prices.

given decent management we wouldnt be here.

so AM's achilles heel has sunk this company, does anyone know if OZL has a risk manager or decent analyst, my bet is that they do not, and if they do then that guy deserves to be shot

good luck for the 8th Jan when we either get the bridging loan or hit receivership.