What is most interesting about future risks is that they are often not countable events. They are events with little past precedent and are hard to handicap. They are subjective probabilities, not objective measures. A major geopolitical event will be adverse for risky assets, but what is the severity of this event? When we use the term 62% probability, does that mean that 62% of the respondents think there will be a geopolitical event, or does it mean there is a 60% chance of it happening? Sometimes, when we present numbers, we do not ask what they really mean. When we use small phrases we are not clear what that phrase could mean. For example, what is a food crisis?
We may love survey work. It provides a foundation for further discussion, but that does not always mean the survey generates clarity of the risks faced.
No comments:
Post a Comment