endogenous risk

Not the keyword you're looking for? See all keywords.

When Risk Models Create Risk When Risk Models Create Risk
10 min read Keywords:  Daníelsson, endogenous risk, VaR, systemic risk, risk models, monoculture, macroprudential regulation, Taleb, Minsky, financial stability

The last essay said the tail is too hard to measure. Jón Daníelsson goes one step further: in finance, the measurement itself changes the thing measured. When everyone uses the same risk model, the model becomes a synchronization device. The answer is a system designed to survive without everyone trusting the same number.