Description: Projecting Budget Surpluses by Carl E. Walsh from Risks and Rewards Newsletter, April 2000, Issue No. 34. Discussion of the difficulties involved in making projections U.S. budget surpluses or deficits and how assumptions change.

Description: GDP growth has slowed as numerous headwinds have emerged. This article summarizes a research paper by Mark Alberts and Max Rudolph that addresses reasons why this is so and how risk managers can address using scenarios.

Description: This is the second part of a 2 part series on Real options analysis (ROA). This article looks into the limitations of using financial option theory when doing real options analysis with projects that are long-dated and uncertain, such as: 1. First-degree homogeneity, 2. Uncertainty must derive from Brownian motion, and 3. Risk neutrality.

Description: This article is part of a 2 part series on real options analysis (ROA). Before you can understand the limitations of ROA, you must first understand the difference between risk and uncertainty. This article goes into detail explaining the vast differences between the two phenomena.

Description: While the major market crash subsequent to the widespread contagion of the COVID-19 virus was readily predictable, the rapid recovery and ongoing growth subsequent to it was not. Market dynamics around the recovery resist characterization by most traditional analytical approaches. In examining the circumstances around the emergence of a large retail class of investors, one sees that ingrained human tendencies, particularly optimism bias, have fueled much investor behavior responsible for the recovery. Understanding this makes it possible to predict potential future crashes and develop behavioral interventions for subsequent market recoveries.

Description: In insurance companies and pension plans currency risk arises when a company has future obligations in one currency and investments in another currency. The question that is often asked is whether this currency risk should hedged or not.

Description: The article contemplates whether there is heightened sensitivity towards how investment activity is portrayed and described.

Description: Traditional predictive tools are not built to deal with the variability the world currently faces. The COVID-19 pandemic amounts to a prolonged black swan event, for which one must look past conventional assessments to arrive at any level of confident predictions. Behavioral analysis factors for biases and heuristics designed specifically for uncertain evolutionary contexts, and which are the primary drivers of market participants’ decisions at present. Through understanding the most likely behaviors of individuals, it becomes possible to arrive at an aggregate understanding of market outcomes.