The computer model combined the monthly probabilities of conceiving, the risk of miscarriage and the probability of becoming permanently sterile through age.
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Their assessment is that, while the probability is low, the risk of a debt crisis is real.
By defining human capital as an asset that must be grown and protected, investors can begin to ascertain how human capital issues impact overall portfolio risk and the probability of achieving their long-term financial goals.
That probability gives you a pretty good assessment of default risk.
Risk is the probability that some or all of these future cash flows will not materialize.
Risk models can only guess at the probability of a strike in a particular place.
We think this indicates plentiful liquidity and an inflation risk, but also too high a probability of a premature Fed pause or cut.
We made money in August because we thought the markets underestimating the probability of a big sell-off, not because we took on a lot of risk.
Clearly this was not a favorable risk reward ratio unless there was data to show better than 70% probability of the move in the direction chosen by an investor.
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Risk management involves achieving your predefined financial objectives at the lowest possible risk or, said another way, is a means to increase the probability of achieving your predetermined financial goals.
To put that another way, if you are at low risk of heart disease, then there is a 99.9% probability that taking statins for a year will give you no benefit.
"When the probability of default goes to zero, default is guaranteed, " observes Christopher Whalen, managing director of Institutional Risk Analytics.
But Lloyds believes that the probability of these loans going bad is negligible, as I have already mentioned, so its own regulator-approved risk model attaches a risk weight to the loans of 2.2%.
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