Introduction: When Everything Happens and Nothing Moves
Markets are reaching record highs, even as global risks escalate. Wars, climate shocks, and political unrest dominate headlines, yet investor reactions remain muted. It feels like markets have stopped caring.
The phrase “nothing ever happens” captures the irony. In truth, everything is happening. But the response is delayed, dulled, or entirely absent.
This article explores the illusion of market stability. We examine how systemic risks are absorbed or ignored. And why risk managers should never confuse calm with safety.
TACO and the Crisis That Never Comes
“TACO”—Trump Always Chickens Out—emerged as a Wall Street meme during the Trump era. It reflected the belief that no matter how serious the threat, political leaders would always pull back from the edge.
Markets began treating political volatility as background noise. Rhetoric and crisis signals were dismissed as theatre. Real policy outcomes mattered less than the assumption that nothing dramatic would ever materialise.
TACO became symbolic of a broader trend: the belief that shocks are temporary, and that systems will always self-correct. But this mindset is dangerous. It builds confidence in inaction and downplays tail risks.
Relying on last-minute reversals or central interventions isn’t a risk strategy. It’s a gamble based on pattern, not substance.
Why Markets Often Ignore Big Events
Modern markets are conditioned to ignore disruption. Central banks have repeatedly stepped in to provide liquidity, reinforcing the idea that major shocks are manageable.
Algorithmic trading accelerates this effect. Many systems are programmed to respond to technical signals, not geopolitical context. Long-term risks are deprioritised in favour of volatility smoothing.
Corporate focus on quarterly results adds to the short-term bias. Events that don’t immediately impact earnings are dismissed as irrelevant. If the numbers hold, the risks are ignored.
This creates an illusion of control. If markets remain stable, decision-makers assume everything is under control. But the absence of movement doesn’t mean the absence of risk. It often means the buildup is just invisible—until it’s not.
The Risk of Misreading Silence
Markets often appear calm in the face of significant geopolitical, environmental or systemic threats. However, this calm is frequently a reflection of delayed reaction, not the absence of risk. Just because volatility is low does not mean that underlying threats have disappeared. In many cases, they are accumulating beneath the surface.
Events such as the COVID-19 pandemic, the war in Ukraine, and the 2008 financial crisis all showed similar patterns. Markets ignored early warning signs, only to react suddenly and sharply once sentiment shifted. The danger lies in interpreting market quietness as a sign of resilience. It is just as often a sign of inertia or complacency.
Risk managers must recognise that a lack of price movement does not mean there is nothing to prepare for. It may indicate the precise moment when planning and scenario testing are most needed.
Complacency as a Risk Multiplier
When risks are consistently underestimated or ignored, complacency takes root. Markets begin to price in stability as the norm, discounting the potential for sudden shifts. Risk models, many of which rely on historical data and linear projections, often reinforce this perception.
This becomes particularly dangerous when those models assume continuity in systems that are increasingly exposed to shocks—whether from political instability, extreme weather, technological disruption, or social unrest. Decision-makers who rely solely on traditional metrics are likely to miss weak signals and emerging threats.
Moreover, when nothing appears to go wrong, organisations often scale back preparedness. Budgets for scenario planning, resilience programmes, and geopolitical analysis are cut. This leaves institutions more exposed when volatility eventually returns. Complacency doesn’t just underestimate risk—it amplifies it.
What Risk Managers Should Do Differently
To avoid being caught off guard, risk managers must develop capabilities beyond traditional market indicators. Financial data alone is no longer sufficient. Broader environmental scanning, geopolitical tracking, and qualitative analysis must be integrated into decision-making.
Scenario planning should go beyond standard deviations and stress test not only financial variables but also systemic shifts—such as political regime changes, regulatory shocks, or global supply chain disruptions. Internal red-teaming, external expert input, and interdisciplinary approaches can help challenge assumptions and expose blind spots.
Risk intelligence must also be continuous, not episodic. It should be embedded across teams and revisited regularly. Risk resilience is not only about predicting what will happen, but about being structurally and culturally ready when it does.
Conclusion: Nothing Happens, Until Everything Does
The illusion of market stability is one of the most persistent challenges in modern risk management. When prices are steady and screens are green, it is tempting to believe that the underlying system is stable. But this belief is often based on delayed perception, rather than real risk conditions.
Ignoring weak signals and over-relying on short-term metrics leaves organisations vulnerable to sudden shocks. The role of the risk manager is to question the calm, not just respond to the crisis.
At The Risk Station, we provide strategic tools and foresight frameworks to help leaders prepare for the risks markets tend to overlook. Because when everyone else is relaxing, risk professionals should be asking better questions.
