The Risks and Opportunities of Unforeseen ‘Black swan’ Market Events

Jun 27th, 2011 | Filed under: Hedge Fund Operations and Risk Management, Institutional Investing, Today's Post | By:
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The precipitous market-collapse which began the 2007 financial crisis was considered to be a ‘once in a thousand year’ event.  Similar ‘not in our lifetime’ rarity was also assigned to the events which followed including the failures of large financial institutions, global contagion, market interventions and (more recently) potential sovereign defaults throughout europe.  All these events (on the left tail of a probability distribution) are united by their consequences- typically so severe that the very survival of financial systems, frameworks and portfolios are at risk.
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Author Bio:
Vikas Shah is Founder of the consultancy Thought Strategy and CEO of Swiscot Group (a diversified trading firm). Vikas writes and publishes Thought Economics, a leading journal where he interviews some of the most influential individuals in the world. He is a respected commentator and analyst on global issues, finance and economics and a non-executive to a number of philanthropic organisations worldwide. You can follow him on twitter @MrVikas.

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  1. Mark,

    Thanks very much for this, and moreover, for the reminder on how risk management should be (re)considered.
    Appreciated it !
    I guess , we are dealing with roughly speaking about two worlds (not concave/convex, etc…), yet it is about people beliefs ! …..anyway, had hardtime to change people’s mind when they got used to concepts, instruments, methods especially in finance.
    A philosophical question or a question of time.
    Well, we will figure it out.
    Time will tell.

    Thanks very much again for this article .

    Best,

    Fernando Walter Lolo
    .

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