Define risk

[RUDEBOY]

SG, i know where you're comming from( i probably should rephrase that), ups!

 

[Salty Gibbon]

Travelling with your wife is pretty risky too.

Just ask Socrates.

 

[RUDEBOY]

SG, i'm not even goin' to go there. But it sounds interesting, to say the least? Nice one!

 

[SOCRATES]

OK, I am free now, lets have a little discussion about risk management, or rather effective risk management.

Lets have your views on what differentiates effective risk management from inefficient risk management first of all.

No opinions please, any views instead. Thanks.

 

[RUDEBOY]

It's all in the eye of the beholder( no set in stone maths, please)?

 

[SOCRATES]

Yes, Rudeboy that is perfectly correct, so far.

Have another stab at it.

 

[barjon]

OK, I am free now, lets have a little discussion about risk management, or rather effective risk management.

Lets have your views on what differentiates effective risk management from inefficient risk management first of all.

No opinions please, any views instead. Thanks.

Socrates

ok I'll start the ball rolling

risk = undesired outcome
level of risk = probability of undesired outcome vs desired outcome
management of risk = restricting the level of risk

when the desired outcome quantum is unknown:

restricting the level of risk = limiting the impact of the undesired outcome

regards

jon

 

[RUDEBOY]

Being honest with yourself reduces risk, you know? Just thought i'd throw that one in!

 

[SOCRATES]

Yes, but there is more to all of this than you are currently considering.

 

[RUDEBOY]

Not really, it's the difference between concious and unconcious risk that really matters. think about it too much and it will bite you?

 

[RUDEBOY]

Or forced as opposed to unforced risk?

 

[RUDEBOY]

Risk is a phenomenom, within genetics? life preserves itself, naturally. But life also needs risk to evolve?

 

[SOCRATES]

Hang on, I have some comms. traffic, back shortly.

 

[RUDEBOY]

It's a delicate balance?

 

[frugi]

Efficient risk management makes the best possible use of probabilistic outcomes and leads to optimal returns while ensuring the risk of ruin is minuscule. It allows one to make the best and safest use of capital given a certain level of skill and expectation of return.

It squeezes the beans as hard as it can without allowing them to be crushed.

?

 

[RUDEBOY]

Frugi, i agree, but do also think that it is human nature to push the limits?

 

[RUDEBOY]

Let's face it mediocre is'nt going to change things?

 

[RUDEBOY]

People look at Nick Leeson as a bad example, he was nearly spectacular? ( in a money making sense, of course). I'll admit, it i admire the guy in a way.

 

[RUDEBOY]

To take bigger risks than usual isn't a bad thing, just as long as you can accept the consequences, if it goes pearshaped?

 

[RUDEBOY]

So, risk management within the markets, 1-2% i believe is the norm. And that's it black and white, unflexing and rigid as a computerised system. No room for error there then, sorry we don't have minds of our own in this game. Well that's not quite true, we're all adults we can risk as much as we want, survival, not really, unconditional risk just gives us all a buzz, and you know it?