“If you don’t take risks, you will never drink champagne” is a proverb in a number of Eastern European languages.
It is an idea that seems to be driving people to risk their lives diving in the Baltic to dig up amber out of the sea floor.
Amber is highly sought after for jewellery in China. And the centre of the world’s amber trade is Kaliningrad, a separated chunk of Russia (technically an exclave) on the Baltic Sea which holds around 90 per cent of the global reserves of the fossilised tree resin.
Up to 18 months ago, most of the amber going into the black market was just dug up on land, and the biggest risk was being caught by the police. Then the government introduced new, higher fines for illegal mining. So the diggers turned to diving to get it from the sea-bed. The law is unclear as to whether this is illegal, but the risk is that you might die in the process, digging under 30 feet of water, clouded by the sand being dug, with the hole you dug liable to collapse on you at any moment. And around a dozen people died doing just that in 2018.
In a region where 50% are unemployed, the lure of getting a product that can sell for $30 per gramme is deemed worth the risk when the alternative is going into the army and getting paid $350 a month – less than a tenth of what they could earn in a day digging for amber under water.
Risk appetite is often assumed to be just about how much risk you can tolerate, often in relation to costs, to downsides, and in those cases you want to stay well within your appetite limits.
But it should also express how much you are willing to take risk, and in those cases you are trying to get near the maximum – but not over it – to maximise the champagne.
Source: Financial Times