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The Lesson of Lehman Brothers: How Risk Models That Ignore Human Behavior Eventually Break
Lehman’s models were mathematically brilliant and humanly blind. They measured risk perfectly — except for the one risk that killed them: people panicking together. That gap still exists in almost every model built today. A 158-Year-Old Firm, Dead in a Weekend September 15, 2008. Lehman Brothers — 158 years old, survivor of the Civil War,…