Risk Quotes

I'll not even try to give a definition of 'Risk Management'.
More than the word Risk, Risk Management is full of traps and paradoxes.

Just to mention some.....

Risk Management is...

• not primarily about risk that can be calculated with a 99,x% confidence level
• dealing with Risks you know will come, but can't be calculated
• more about correlation in time than mean estimates and standard deviation
• more about prevention, foreseeing and managing risk than capitalisation of risk
• more about taking risks to benefit, than trying to exclude risks
• fighting risk instead of excluding risk
• making Plans B and C, in case your confidence level fails

Avoiding Risk

One of the trickiest parts of Risk Management is that we often  are trying to avoid Risk at any price.

By doing so, we introduce a new risk: It gets harder to achieve shareholder and client value.

Often returns will decline because of over-capitalisation and a risk-return unbalance.

Finally we have to compete in new risk areas we're not experienced in. 

It's all well expressed in a cartoon on cartoonstock:

'We've considered every potential risk, except the risks of avoiding all risks.'


Personally I prefer the challenging Risk Management quote of Jos Berkemeijer, that states:

 "Risk Management: the art of foreseeing hindsight."

Better than trying to define Risk or Risk Management, it is to study and get inspired by Risk Quotes.

Therefore I conclude this Blog with a link to the Blog 'Risk Quotes'

You can place a random quote like this one:

Random Risk Quote

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Related Links
- Risk Quotes
- Riskviews: quotes
- Best Risk Management Quotes
- Death of Risk Management

Voltaire: Diplomats, Ladies and Actuaries..

Actuaries understand the difference between 'being sure' and telling it....
Some of us are Diplomat, Lady and Actuary in One.... what a dazzling combination...
 

Diplomats, Ladies and Actuaries
When a diplomat says yes, he means ‘perhaps’;
When he says perhaps, he means ‘no’;
When he says no, he is not a diplomat.


When a lady says no, she means ‘perhaps’;
When she says perhaps, she means ‘yes’;
When she says yes, she is not a lady.

- Voltaire 1694-1778 quoted in Escandell 1993 -

When an actuary says yes, (s)he means 'probably'
When (s)he says probably, (s)he means 'sure'
When (s)he says 'sure', (s)he is not an actuary.

- Joshua Maggid Actuary Info 2010 -

Invest or laugh

Every crisis generates his own new quotes. Currently, investment quotes are the top.

Perhaps two of the best investment quotes ever are from AIG Vice Chairman Jacob Frenkel:

"The left side of the balance sheet has nothing right and the right side of the balance sheet has nothing left. But they are equal to each other. So accounting-wise we are fine."

--------------------------------------------

"Credit markets do not function. Why not, because the word credit comes from credibility"

But there's more... A nice summary of investment ROFL quotes can be find on Ian Thomson's blog Investor Jokes.

As actuaries, let's profit from Ian's latest insights and gain some extra education points by studying the next new investment definitions:

• A long term investment: Short term investment that failed.
• Momentum Investing: The fine art of buying high and selling low.
• Value Investing: The art of buying low and selling lower

Probably investors and actuaries will have a hard time understanding each other, as the difference between them is in the 'tail' .....

Also large-cap fund managers have a hard time these days. No wonder everybody starts looking for a small-cap fund manager....
But how do you find one? Ians' answer is simple: Find a good large-cap fund manager, and wait...

Anyhow, keep up your good mood and laughs, as more investment 'animals' will show up next months.....


Let's conclude this blog with an old actuarial warning:

"Where there's smoke, someone gets fired"

P.S. For some more 'serious' investment quotes take a look at 52 Must Read quotes from the legendary Investor Warren Buffett. I'll quote some of the best here:

• I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
• If past history was all there was to the game, the richest people would be librarians (actuaries?).
• It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.
• It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.
• It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
• Price is what you pay. Value is what you get.
• Risk comes from not knowing what you’re doing.
• Risk is a part of God’s game, alike for men and nations.

How can actuaries profit from Buffett's quotes?

Sources:
- Greekshares Jokes
- Ian's Investor Jokes
- Warren Buffett: 52 Must Read quotes

Reward Wisdom

We all know the quote

'If you pay peanuts you get monkeys'

Unfortunately the opposite is also true:

"If you pay bonuses, you get donkeys"

There is nothing against an attractive yearly bonus reward, based on challenging but nevertheless realistic (long term) goals in line with a confirmed and balanced risk approach.

Excessive bonus rewards however, seduce people to inferior (selling) methods or taking unacceptable (covered) risks.

An excessive bonus reward system always poisons the company and attracts the 'wrong' people. Your company doesn't need high risk takers or 'luck seekers'. Think twice....