hammurabi and the ethics of finance
recently listened to what i thought was an interesting discussion between Nassim Taleb and Russ Roberts (turns out i cannot post links as i am new to this site, but if you go to econtalk and search "Taleb on skin in the game" you should be able to find the podcast)
in it, taleb argues that ethics are fundamentally a part of risk management in finance. he draws on hammurabi code, with the example of a home builder who, under a scenario where the house he builds collapses to kill the owner, is put to death himself. this is the well known eye-for-an-eye mantra you hear about growing up, and is used as an example to represent the idea that "skin in the game" can serve as a useful mitigant for risk-taking behavior.
as much as i enjoy listening to economists theorize on what should or could be, i am interested to hear from people working in risk management in finance . how has the field evolved since the great recession? how much more of an influence/voice do risk managers have on decision makers? are they the decision makers? is there any practical applications for "skin in the game" risk-taking that would more closely align the interests of those investing others' capital? have there been any innovations in this respect? does track record negate the need for "skin in the game" over time? if so, should it?
any insight/opinions from those in the field would be very interesting to hear.