Episode 6:
Understanding Risk with Allison Schrager

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Economist, author and keynote speaker Allison Schrager spoke to Dan Mikulskis back at the PLSA conference in Edinburgh a few weeks ago.

They discuss:

  • Why investing is a risk management problem not a beat the markets problem
  • What visiting a brothel reveals about risk
  • Why risk metrics can be useful but can give you a false sense of security
  • Why measuring risk is like trying to nail jelly to the wall
  • Risk management is about choosing the right tool for the right job
  • Why Allison doesn’t like scenario tests or backtests
  • Your best tool in risk management is a sense of humility
  • The difference between risk and uncertainty - Unknown unknowns and known knowns. Don’t let unknown unknowns lead you to throw out the tools we do have
  • The generational move toward putting retirement risk on individuals, but how the problem is often miss-specified
  • Allison’s 5 key tips to addressing and managing risk
  • Why people confuse diversification and hedging
  • Why we aren’t doomed to make irrational choices, if things were just presented a little better

Useful links referred to in our podcast this week

Allison Schrager - An Economist Walks Into A Brothel

Allison’s keynote speech  

Allison’s website

Allison’s recommendations 

Gerd Gigerenzer: Risk Savvy, How to Make Good Decisions

The Indicator Podcast (Plant Money) 

Peter Bernstein Against the Gods

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