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The Edge of Chaos
When Risk Models Create Risk
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.
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The Edge of Chaos
Why the Calm Is Dangerous
A system heading for a tipping point gives off warning signs in unexpected places. The danger rarely arrives as drama and rising volatility. It hides in the calm. Ecologists learned to read it in lakes and climate, and the same signature shows up before some market crises. This is the measurable cousin of everything in this series.