Goldman CEO on risk: The worst 'absolutely will happen'

Goldman CEO: What I learned from the financial crisis
Goldman Sachs CEO Lloyd Blankfein discusses the lessons he learned from the global financial crisis, and why he thinks Fed chair Ben Bernanke has done a good job so far, at the Australian Institute of Company Directors in Sydney.
Investors should always prepare for the most extreme risk scenario because it will happen, Goldman Sachs CEO Lloyd Blankfein told the Australian Institute of Company Directors at a breakfast briefing on Friday.
Blankfein, who's been Goldman CEO since 2006, steered it through the fallout of the global financial crisis of 2007-2008. He said the experience had taught him to accept that the worst thing you can imagine will inevitably happen.
"Most risk management is really just advanced contingency planning and disciplining yourself to realize that, given enough time, very low probability events not only can happen, but they absolutely will happen," said Blankfein.
"The definition of infinity is that you wait long enough, everything happens."
(Read more: Why Goldman Sachs earnings weren't all that: trader)
Blankfein said in his view, the major problem during the financial crisis was that ordinary people were banking on the fact that the scenario they feared the most, the collapse of real estate prices, was not a possibility
.