The calm before the storm
If you are one of those people that believe in mean reversion, that markets, perhaps all things have cycles, then this VIX ETP Vega Notional chart below should strike you as being poised for a very scary regime shift. If Artemis Capital Management and their Alchemy of Risk publication have it right [LINK], the world of finance is about to be eaten by the Ouroboros.
Their story is compelling, and I have to agree, long-only equities, passive investors and governments across the world doing their best to prop markets up with low-interest rates over what has now been a decade of anaemic recovery, has created an equities market without volatility. It is this same naive outlook, this same belief that diversification will save the day, that modern portfolio theory considers all things volatile as dangerous and all things short of volatility as safe that will lead us to our downfall. Once again the markets are in a bubble, and this can't continue without the shadow cycle kicking in at some point.
Two positions worth taking note on that should be concerning regarding 'potential energy' (risk) rather than 'kinetic energy' (risk) include:
 Since the 2008 Credit Crisis, global debt to Gross Domestic Product has risen to a position that is 40% higher than it was at the cusp of the Global Financial Crisis. The bubble of all bubbles is upon us.
 From Artemis Alchemy of Risk writings, there are 3.8 trillion of share buybacks in play "artificially boosting earnings-per-share by increasing balance sheet risk."
In line with this, it is ironic timing but concerning all the same that the governor of China's Central Bank warns of potential for a "Minsky Moment"
"If we are too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction, what we call a ‘Minsky Moment’"
Risk of Excessive Optimism | FT [LINK]
I implore risk managers to read this paper [LINK] as it is, on the one hand, fascinating and on the other controversial in that, a market with low volatility might be the most dangerously fragile place to operate and quite the opposite to what one would expect. It is the Ouroboros Paradox, and your historical Value at Risk reports are about to let you down once more, just when the credit cycle reverses.