Albert Einstein is famously quoted as saying that
Insanity is doing the same thing over and over and expecting different results.
Of course, risk management is based upon an assumption that if you do something that is risky over and over again, you will get different results. And that through careful management of the possibilities, you can, on the average, over time, get acceptable results, both in terms of sufficient gains and limited losses.
But there is also an embedded assumption in that statement that is hidden. The statement should include the standard caveat “all else being equal”.
But in fact, all else is NEVER equal. At least not out in the world where things count. Not for things that involve people. Out in the real world, once can count on the same result from the same actions, but only for a while.
All else never stays the same in the situations where people are involved because people rarely continue to follow rules like the rules of physics. People keep changing what they do.
For example, the ideas of Hyman Minsky regarding the changing approach to credit. People just do not leave things alone. With credit, people are constantly seeking to get just a little more juice out of the lemon.