If risk is so important to the financial industry, what of uncertainty?
Published by Stephanie Russe... on Sun, 01/27/2013 - 21:58This blog post is part of the investigation:
In the financial industry, risk is everything. Whether it be market risk, operational risk, representational risk, or credit risk, actors in financial markets base their decisions on measures of risk: calculations of potential losses and future events. Most risk today can be quantified to some degree – numerical indicators such as Value at Risk (VaR) allow financial analysts to simplify predictions and parse out precise degrees of probability. On the basis of these calculations, trades are made, companies are bought and sold, stocks are valued. Risk both defines and creates the market.
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