--- title: "Meaning & Key Takeaway of: Most of the time, your risk management…" description: "\"Most of the time, your risk management works. With a systemic event such as the recent shocks following the collapse of Lehman Brothers, obviously the ..." image: "https://sms4smile.com/quotes/i/592/myron-scholes-25844_after_most-of-the-time-your-risk-management-wo_231068.jpg" --- # Most of the time, your risk management works. With a… ![“Most of the time, your risk management works. With a systemic event such as the recent shocks following the collapse of Lehman Brothers, obviously the risk-management system of any one bank appears, after the fact, to be incomplete. We ended up where banks couldn't liquidate their risk, and the…” quote by Myron Scholes](https://sms4smile.com/quotes/i/592/myron-scholes-25844_after_most-of-the-time-your-risk-management-wo_231068.jpg) [Download](https://sms4smile.com/quotes/i/592/myron-scholes-25844_after_most-of-the-time-your-risk-management-wo_231068.jpg) [Open image](https://sms4smile.com/quotes/i/592/myron-scholes-25844_after_most-of-the-time-your-risk-management-wo_231068.jpg) > “Most of the time, your risk management works. With a systemic event such as the recent shocks following the collapse of Lehman Brothers, obviously the risk-management system of any one bank appears, after the fact, to be incomplete. We ended up where banks couldn't liquidate their risk, and the system tended to freeze up.” [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Systemic shocks expose gaps in individual banks’ risk models, leading to liquidity freezes when markets seize. **In simple terms:** Risk models may fail in crises. Key Takeaway Plan for systemic risk. Themes risk systemic risk liquidity Mood reflective concerned Type risk regulatory When to use this quote - Banking crisis - financial regulation - liquidity management - contingency planning Key Concepts Risk modeling stress testing market shock Questions to Reflect On - What safeguards can banks add for systemic failures? - How to improve stress testing? A Different Perspective Models can’t predict all extreme events. ★ ★ ★ ★ ★ No ratings yet [Banks](https://sms4smile.com/quotes/about/banks/) [Brothers](https://sms4smile.com/quotes/about/brothers/) [Collapse](https://sms4smile.com/quotes/about/collapse/) [Customer](https://sms4smile.com/quotes/about/customer/) [Lehman brothers](https://sms4smile.com/quotes/about/lehman-brothers/) [Management](https://sms4smile.com/quotes/about/management/) [Risk](https://sms4smile.com/quotes/about/risk/) [Risk management](https://sms4smile.com/quotes/about/risk-management/) [Shocks](https://sms4smile.com/quotes/about/shocks/) [System](https://sms4smile.com/quotes/about/system/) [Time](https://sms4smile.com/quotes/about/time/) ## Related quotes > [Most people heard about Bitcoin for the first time in the context of the Mt. Gox collapse. 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The fatal problem might…](https://sms4smile.com/quotes/steve-bannon/remember-circuit-city-bear-stearns-lehman-brothers-sports-authority/) [Steve Bannon](https://sms4smile.com/quotes/author/steve-bannon/) > [“When Lehman Brothers collapsed on September 15, 2008, and inaugurated the biggest crisis since the 1930s, there were no real alternatives to hand. No…](https://sms4smile.com/quotes/rutger-bregman/when-lehman-brothers-collapsed-on-september-15-2008-and-inaugurated-2/) [Rutger Bregman](https://sms4smile.com/quotes/author/rutger-bregman/) > [Now we are intimately locked together. You get swine flu in Mexico; it’s a problem for Charles de Gaulle Airport 24 hours later. Lehman…](https://sms4smile.com/quotes/paddy-ashdown/now-we-are-intimately-locked-together-you-get-swine-flu-in-mexico-it/) [Paddy Ashdown](https://sms4smile.com/quotes/author/paddy-ashdown/) > [I wasn't on the board of Lehman Brothers. I was a banker, and I was proud of it and I traveled the country and…](https://sms4smile.com/quotes/sean-hannity/i-wasn-t-on-the-board-of-lehman-brothers-i-was-a-banker-and-i-was/) [Sean Hannity](https://sms4smile.com/quotes/author/sean-hannity/) > [I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers.](https://sms4smile.com/quotes/henry-paulson/i-never-once-considered-that-it-was-appropriate-to-put-taxpayer-money/) [Henry Paulson](https://sms4smile.com/quotes/author/henry-paulson/) > [The assumption that Washington could and would resolve Lehman Brothers without a bankruptcy, as it had Bear Stearns, was the single biggest mistake in…](https://sms4smile.com/quotes/david-malpass/the-assumption-that-washington-could-and-would-resolve-lehman/) [David Malpass](https://sms4smile.com/quotes/author/david-malpass/) > [“When Lehman Brothers collapsed on September 15, 2008, and inaugurated the biggest crisis since the 1930s, there were no real alternatives to hand. No…](https://sms4smile.com/quotes/rutger-bregman/when-lehman-brothers-collapsed-on-september-15-2008-and-inaugurated/) [Rutger Bregman](https://sms4smile.com/quotes/author/rutger-bregman/) ## More by Myron Scholes > [My career in academic research has not been involved with active management of securities. I've tried to understand risk-and-return relationships; also the pricing of…](https://sms4smile.com/quotes/myron-scholes/my-career-in-academic-research-has-not-been-involved-with-active/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [Building a road might create temporary jobs, but does it really create wealth if it doesn't also shorten commute times or otherwise make society…](https://sms4smile.com/quotes/myron-scholes/building-a-road-might-create-temporary-jobs-but-does-it-really-create/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [The experience of the '90s, whether it's the '94 peso crisis or the '97 crisis in Asia, the '98 crisis, even the 2001 crisis,…](https://sms4smile.com/quotes/myron-scholes/the-experience-of-the-90s-whether-it-s-the-94-peso-crisis-or-the-97/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [A futures contract is a derivative, but the futures exchange doesn't call them 'derivatives,' they call them 'futures.'](https://sms4smile.com/quotes/myron-scholes/a-futures-contract-is-a-derivative-but-the-futures-exchange-doesn-t/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [If someone says to you, 'Go to an old-folks' home,' that's kind of ridiculous, because a lot of old people are doing terrific things…](https://sms4smile.com/quotes/myron-scholes/if-someone-says-to-you-go-to-an-old-folks-home-that-s-kind-of/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [All models have faults - that doesn't mean you can't use them as tools for making decisions.](https://sms4smile.com/quotes/myron-scholes/all-models-have-faults-that-doesn-t-mean-you-can-t-use-them-as-tools/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [If someone says to you, Go to an old-folks home, thats kind of ridiculous, because a lot of old people are doing terrific things…](https://sms4smile.com/quotes/myron-scholes/if-someone-says-to-you-go-to-an-old-folks-home-thats-kind-of/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [I'm a theorist, not an institutionalist.](https://sms4smile.com/quotes/myron-scholes/i-m-a-theorist-not-an-institutionalist/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [I was involved with Wells Fargo Bank as a consultant in the late 1960s and early 1970s, when I suggested to them that they…](https://sms4smile.com/quotes/myron-scholes/i-was-involved-with-wells-fargo-bank-as-a-consultant-in-the-late/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [My first reaction on being awarded the Nobel Prize was, actually, I thought of Fischer Black, my colleague. 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