ABSTRACT
This article offers a risk sociological perspective on the risk management during – and its consequences for the course of – the subprime crisis. Building upon previous work (Dosdall & Rom-Jensen, 2017), we use the example of the non-rescue of the US-American investment bank Lehman Brothers in September 2008, to demonstrate that the regulatory interventions during the subprime crisis created new risks for the regulators. These risks led the regulators to make decisions exacerbating instead of containing the crisis. Accordingly, we aim to specify the notion that risk management presents itself as an inescapably risky operation (Japp, 1996; Luhmann, 1993) for the course of the subprime crisis. In doing so, we follow risk sociological approaches that emphasize that risk reduction and risk escalation often go hand in hand (Wildavsky, 1979, p. 34). Numerous works have demonstrated this connection within internal control systems (Power, 2004, p. 28) or redundant safety systems (Perrow, 1984, p. 53, 1999, 151f.; Sagan, 1993, 1994, p. 232, 2004). However, while this risk sociological insight has received widespread attention with regard to technical systems, it has not yet been applied with regard to the subprime crisis. Thus, the aim of this article is to further our understanding of crisis dynamics by pointing out the fruitfulness of such an analytical angle.
