The third post in the Mental Models for Corporate Counsel series.
For example, in a contractual negotiation setting a client might agree to take on additional risk through a widely drafted indemnity. The client might say something along the lines of ‘We’ll live with it’ or ‘We’ll just have to monitor that as we go’. They might believe it’s risk that can be mitigated through additional action - perhaps a new procedure or an individual responsible for making sure the problem never eventuates. But the ‘Fooled by Randomness’ Model tells us the risk is more likely to explode as a result of random occurrences outside anyone’s control, and so our actions are of limited use.