Tag Archives | uncertainty
risk_intuition

Test Your Risk Intuition

March 28, 2011

I am dusting off a classic test for risk intuition. If you remember the test from years past, it will be nice to reminisce. If not, take the test now to assess your intuition and look at risk in a new way.

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Upside Risk, Downside Risk

March 8, 2011

Risk has two components: exposure, and uncertainty. If either is absent, there is no risk. But some people insist there must be a third component: downside. Let me explain. If you are uncertain about some consequential event, the set of possible desirable outcomes is sometimes called your “upside risk”. The set of possible adverse outcomes is [...]

individual_2

Market Makers’ Dilemma

October 11, 2007

One of my clients deals in a specialty commodity. They source the commodity, process it, and then sell it in local markets around the world. In some local markets, my client is a two-bit player. In others, they are the market maker. In those markets, they largely set the price of that commodity. Unlike a [...]