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How to plan for the next crisis

Working It

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The Importance of Incentives in Risk Management

This was a very fast bank run. So it took a lot of regulators by surprise. In my article, I quoted James Detta, the University of Virginia, as saying we're pretty much hardwired not to deviate from our group. Most people like to go along. If they have their doubts, they think, well, I'm only one person. And why should I really sort of take the risk of going against everybody else? It's quite uncomfortable to be the dissident. John, how much do you think the incentive system leads to people taking bigger risks?

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