Optimisation As a Failure Mode
Why optimising your budget and investments can make your finances more fragile. Efficiency reduces tolerance for disruption.
Optimisation As a Failure Mode The system is optimised. Costs are efficient. Cash is deployed. Returns are maximised. Nothing is wasted. The Assumption Efficiency improves outcomes. It often reduces tolerance. The Mechanism Optimisation removes slack. Cash buffers shrink. Margins tighten. Everything is allocated. Household Reality Idle cash feels inefficient. So it is invested. Or used. Or committed. The system runs closer to the edge. What Changes There is no room for interruption. Small shocks require immediate adjustment. The Trade-Off Efficiency increases precision. But reduces tolerance. A system with no slack cannot absorb disruption. Alternative Deliberate inefficiency. Unallocated cash. Visible buffers. Unused capacity. Key Insight Optimisation improves performance in calm conditions. Resilience requires margin. Efficiency without slack creates fragility.