Societal Risk

Societal Risk 

Risk management is always at the core of financial industry. After 2008 financial crises, risk management becomes even tighter than before. Is the obsession of risk management in the financial system a blessing for the broader society?

An important part of reducing the financial risk is to keep increasing the pension deduction. As more money pumps into the market, the risk of substantial market correction declines. But the increase of pension deduction reduces the amount of resources available to the average household as well, especially the young people in their reproductive age. After 2008, fertility rates in US consistently dropped below the replacement rate, despite of, or because of the longest bull market in the history. 

A policy good for the financial industry is not necessarily good for the whole society. But few would listen to such a statement in a bull market.

When the powerful financial industry becomes obsessed with the risk reduction of its own sector, the risk of the overall society inevitably rises.