Risk-on, risk-off

In 1986, a relatively unknown economist wrote about the boom-and-bust financial cycles, contrasting them with the attendant cycles of risk. In the boom period, risks appear remote and companies are willing to increase leverage. Lending standards fall and risk management is marginalised, until boom gives way to bust. Governance and risk management are most necessary in the growth phase, rather than in the bust phase when caution would naturally dominate; however, the discourse on these topics takes place at the other ends of the cycle.

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