9. Nicholas Taleb, a trader and the author of a body of work attacking risk measures used by financial institutions, wrote an article titled “Ten Principles for a Black Swan–Proof World.” One of the principles listed in the article is the following:

Do not let someone making an “incentive” bonus manage a nuclear plant—or your financial risks.

Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative.”

Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.23

a. How does this principle apply to the issue of measuring risks that banks must report to regulators?

b. How does this principle relate to the 2012 trading loss of $6.2 billion by JPMorgan Chase bank?