Episode 6:
Understanding Risk with Allison Schrager
Our viewpoint
1 April 2020
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Economist, author and keynote speaker Allison Schrager spoke to Dan Mikulskis back at the PLSA conference in Edinburgh a few weeks ago.
They discuss:
- Why investing is a risk management problem not a beat the markets problem
- What visiting a brothel reveals about risk
- Why risk metrics can be useful but can give you a false sense of security
- Why measuring risk is like trying to nail jelly to the wall
- Risk management is about choosing the right tool for the right job
- Why Allison doesn’t like scenario tests or backtests
- Your best tool in risk management is a sense of humility
- The difference between risk and uncertainty - Unknown unknowns and known knowns. Don’t let unknown unknowns lead you to throw out the tools we do have
- The generational move toward putting retirement risk on individuals, but how the problem is often miss-specified
- Allison’s 5 key tips to addressing and managing risk
- Why people confuse diversification and hedging
- Why we aren’t doomed to make irrational choices, if things were just presented a little better
Useful links referred to in our podcast this week
Allison Schrager - An Economist Walks Into A Brothel
Allison’s recommendations
Gerd Gigerenzer: Risk Savvy, How to Make Good Decisions
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