Conventional risk involves probability that we can clearly identified and measure.
Risk is the probability that some or all of these future cash flows will not materialize.
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.
Our brains aren't very good at probability and risk analysis, especially when it comes to rare events.
The computer model combined the monthly probabilities of conceiving, the risk of miscarriage and the probability of becoming permanently sterile through age.
BBC: The researchers evaluated women's chances of conceiving
When debt is treated more like a utility, with the lender managing risk so there is a high probability the loan and the agreed-upon yield will be paid, such lending is more consistent with its economic purpose.
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Risk models can only guess at the probability of a strike in a particular place.
Their assessment is that, while the probability is low, the risk of a debt crisis is real.
We think this indicates plentiful liquidity and an inflation risk, but also too high a probability of a premature Fed pause or cut.
But we can afford reasonable risk management: insuring against the truly catastrophic, low-probability events that hopefully never afflict us.
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That probability gives you a pretty good assessment of default risk.
One situation would be when you have a higher probability than most that you will need care and the risk is just too great to your financial security to self-insure.
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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.
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.
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