We have always thought that those in science strive for the objective truth, but such academics follow similar kibbutz-style groupings where their "facts" are constructed as a function of their social interaction.  Such interaction only occurs from within the group with diminishing contact with outsiders.  The consequence of this is a term of reference that is distinct from the rest of the population.  Which is fine until they tell us what to think (SJWs) and, worse, change (COVID-19, Climate change).  First step in risk management is to at least appreciate we are no longer speaking from the same planet.

Large non-profit organisations such as charities, pressure groups and NGO present a particular symptom known as misalignment of incentives where the original objectives have shifted over time.  Professional administrators, marketers and connected schmoozes replace the idealistic founders so that they can draw in more money.  Like a train without breaks, nobody knows how to stop.  Especially when approaching the station.  Recent scandals have shown that it is not only bankers that revel in such behaviour but NGOs and Charities.  And yet, we never trusted or held bankers in high esteem.

(for those that know their 80s prog rock, the episode title is the opening line to The Cars song, Drive)

The key feature of Texas Hold-em poker is the combination of cards that every player can see and those that are private.  This feature of asynchronous information pops in the buying and selling of antiques and illiquid tradeable securities in that those that are successful transact a lot.  The podcast finally discusses the adrenalin fuelled glory-or-ignominy pricing and trading of large blocks of stock.

The current narrative around covid-19 false positives mixes conflicts the narrative around the prediction of infection rates with the mathematical certainty of false positives.  This episode provides a non-mathematical explanation of false positives and point out that this is beyond dispute.  False positives don't lie, but the narrative and subsequent name-calling does. 

One can find Correlation everywhere so long as you look hard enough.  The issue comes when you try to make policy based on its implied causality.  Correlation is the most mis-used element of mathematics in that it has alchemistic properties.  The magic of correlation changes assets that are un-investible into shinny, highly-rated instruments.  Works fantastically well.  As Margot Robbie nearly explained in "The Big Short", the bursting of sub-prime directly points to the nuclear features of correlation. 

Professor Sentra Gupta is an impressive academic.  More importantly, she is sticking to her criticism of her fellow academics who are showing signs of groupthink behaviour on how to stop covid-19 from kicking off a second wave of infection.  Those on the inside thank her contribution by criticising her reckless behaviour and puts her in the same camp that selfishly protest in central London against the masks and curfews.  There is a reason for this behaviour and is the same root of all evil.

The purest form of risk management in finance is to be a Local in a trading pit.  With limited financial backing, they make prices on derivatives to enable much larger client fill their orders.  A bad day in the office often resulting in an individual losing everything.  Somewhat focuses the mind on managing a position and all done with shouting, bizarre hand signals and filling in cards.  At the end of Season three, I wanted to remind those budding risk managers than on occasion you need to stop hitting the F9 button and go back to basics.  To those who bet everything to be in the game.

Groups such as committees and boards can lead to terrible outcomes when there are no dissenting voices to balance the more aggressive influencers.  The lack of pushback can lead to complicit behaviour that in extremes to fraudulant behaviour.  One key reason is that people do not like to be the loan wolf.  After all, they have a mortgage to pay and the kids will be on holiday soon.

Watergate was famous not for the original misdemeanour in that now-famous DC hotel, but the cover-up.  It is a highly-frequent response when people have to setbacks is to wish the problem away and stuff it under the carpet.  Although there are many instances in finance, the lie and deny strategy permeates all society.  We can all use the six-step response plan if we want to avoid a gate scandal.

The narrative and government reaction around covid-19 continues into a fantasy world of the Loch Ness monster that is the second wave.  There are two camps that either focus on the infection or death rate.  What they should be looking at is the rate of causality that links infection to hospitalisation to fatality.  The podcast discusses how the strength of the causality can explain why the situation in September 2020 is completely different to April/May.