Renault presents its accounts with a line cost of risk Non

When banks have their accounts of result, a line which is to go directly to the net more should attract our attention, it's the "cost of risk." The amount is, especially in these times of crisis, important and can plunge the accounts into the red. But beyond this accounting impact, ask a simple question: why are there that banks that the calculate

The Bank is a trade risked, but sell cars also. Renault presents its accounts with a line "cost of risk" Non. Well do in the hypothesis, suppose a cost of the risk of EUR 1 billion (which would therefore all net). Financial analysts would then ask the leader of the automobile manufacturer from where comes this line, and his answer is to take into account the unexpected slump in sales of certain models. Would he inspire confidence Are pushing our game a little more further and suppose that engineers from the Office of studies be paid based on sales, with the key to the bonus of several million euros if the model is a cardboard. The design and functionality of the Renault become much bolder, with perhaps a few success stories, but also resounding failures. Sales of the company become more volatile, more precarious profitability and a few models misfire after the would put into bankruptcy. Just describe, everyone will have understood, the banking system as it works.

Then why Renault, finally all companies except the banks, not calculate not risk cost Do they not care Not, of course. The reason is simple: risk is not separated from the activity of the company. There is not a product designed and manufactured on the one hand, and a risk calculated on the other hand, both are designed together. Renault mobilizes all its resources at each stage to the best possible, knowing that the home of the customers will be more or less consistent with its expectations. Builders of bridges are not on one side a team fantasy designers paid the bonus and, on the other, a cell for the calculation of strength of materials (if not the slightest problem of communication between them would result in the collapse of the work), everything is designed at the same time, the teams are mixed, for greater security.

In the financial sector, on the other hand, financial products are built on a fundamental dichotomy: performance and risk. These two data can be separated and then added, it is the heart of the classic theory of finance since Markowitz and Sharpe, who is now back in the VAR (Value at Risk), the tool for the calculation of the risks of banks. Although researchers have criticized this model (Benoît Mandelbrot, including Nassim Taleb) and if bankers are partly aware of its limitations, the mental framework of this theory persists, the risk can be autonomisé, reified, globalized, where, in the end, the appearance of the line cost of risk. We understand now that the problem is poorly done since the beginning, that seek a better control of risks will not solve the problems of bankruptcy or the recurring systemic crises. It is the fact that there is a division of autonomous, distinct from the other functions of the Bank risk, wrong, which proves that the finance box on both legs. The line cost of risk, it is the illusion to hold the wick of a barrel of powder on which it sits. Is the empowerment of the risk involved and to recover from this error will go through the deconstruction of the classic theory of finance and the establishment of an approach which will make the risk the companion of all days, all the shares, rather than the embarrassing guest is rejected at the bottom of the room.