Quotes & Sayings About Financial Risk

For many of the most powerful people in the entertainment business, hostility to organized religion goes so deep and burns so intensely that they insist on expressing that hostility, even at the risk of financial disaster. — Michael Medved

Diversifying sufficiently among uncorrelated risks can reduce portfolio risk toward zero. But financial engineers should know that's not true of a portfolio of correlated risks. — Harry Markowitz

I think risk is important. I don't care if it's a great financial risk or a physical risk. You only get out of something what you put into it and the fact that you are willing to risk something means that you are going to get a lot more out of it. — Yvon Chouinard

The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike. — George Soros

Our entire approach to the banking and financial services business is risk-adjusted returns. We believe that in most parts of the world, and including pockets in India, banking tends to mis-price risk. — Uday Kotak

In the financial world, risk translates to uncertainty. It's measured by "standard deviation from the norm" -- in other words, it's measured by how much the returns swing up and down. Says King, "Most individuals measure risk as their chance of loss, but we measure risk by the variability of returns. — Kathy Kristof

Below, we itemize some of the quite different lessons investors seem to have learned as of late 2009 - false lessons, we believe. To not only learn but also effectively implement investment lessons requires a disciplined, often contrary, and long-term-oriented investment approach. It requires a resolute focus on risk aversion rather than maximizing immediate returns, as well as an understanding of history, a sense of financial market cycles, and, at times, extraordinary patience. — Seth Klarman

What would it mean in practice to eliminate all the 'negative people' from one's life? It might be a good move to separate from a chronically carping spouse, but it is not so easy to abandon the whiny toddler, the colicky infant, or the sullen teenager. And at the workplace, while it's probably advisable to detect and terminate those who show signs of becoming mass killers, there are other annoying people who might actually have something useful to say: the financial officer who keeps worrying about the bank's subprime mortgage exposure or the auto executive who questions the company's overinvestment in SUVs and trucks. Purge everyone who 'brings you down,' and you risk being very lonely, or, what is worse, cut off from reality. — Barbara Ehrenreich

Starting with the highest-risk countries, and focusing on the route to Britain that is widely abused, student visas, we will increase the number of interviews to considerably more than 100,000, starting next financial year. From there, we will extend the interviewing programme further across all routes to Britain, wherever the evidence takes us. — Theresa May

Time is running out fast. I think we have maybe a few months
it could be weeks, it could be days
before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it. So they have to act now. — Willem Buiter

I'm afraid sometimes certain individual cases of defaults are unavoidable. What we should do is to step up monitoring, properly handle relevant matters, and ensure there is no regional and systemic financial risk. — Li Keqiang

The main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. "When things go wrong it's their problem, — Michael Lewis

I believe that the general growth in large [financial] institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically
I should say, fully
hedged. — Alan Greenspan

I have a perverse attraction to risk. Not physical risk but emotional, financial risk - anything than can't kill you immediately. — Scott Adams

I think the rise of quantitative econometrics and a highly mathematical approach to risk management was the obverse of a decline in interest in financial history. — Niall Ferguson

Life Insurance is a mitigation to the risk of your life
Financial Freedom is a mitigation to the risk of living your life !!
Choice has always been yours. — Manoj Arora

Back in the 1980s, the original stated purpose of the mortgage-backed bond had been to redistribute the risk associated with home mortgage lending. Home mortgage loans could find their way to the bond market investors willing to pay the most for them. The interest rate paid by the homeowner would thus fall. The goal of the innovation, in short, was to make the financial markets more efficient. Now, somehow, the same innovative spirit was being put to the opposite purpose: to hide the risk by complicating it. The market was paying Goldman Sachs bond traders to make the market less efficient. — Michael Lewis

In the financial system we have today, with less risk concentrated in banks, the probability of systemic financial crises may be lower than in traditional bank-centered financial systems. — Timothy Geithner

I believe that the banks and the financial services industry take more than their fair share of our profits by using unfair business tactics. It now appears that our entire financial system has taken far more risk than is warranted by its capital structure and that this will lead to a market crash affecting economies worldwide. Gordon L. Eade — Kenneth Eade

Portfolio theory, as used by most financial planners, recommends that you diversify with a balance of stocks and bonds and cash that's suitable to your risk tolerance. — Harry Markowitz

Our present tax system ... exerts too heavy a drag on growth ... It reduces the financial incentives for personal effort, investment, and risk-taking ... The present tax load ... distorts economic judgments and channels an undue amount of energy into efforts to avoidtaxliabilities. — John F. Kennedy

You know what works in venture capital? A group of incredibly smart, connected people who have the financial wherewithal and risk appetite to make multi-million dollar bets on unproven ideas and inexperienced founders. People who can make decisions quickly, and who spend their time trying to help entrepreneurs make the most of that cash. — Sarah Lacy

However, optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers. One of the lessons of the financial crisis that led to the Great Recession is that there are periods in which competition, among experts and among organizations, creates powerful forces that favor a collective blindness to risk and uncertainty. — Daniel Kahneman

at the height of the crash. "Each time someone at the table pressed for more leverage and more risk, the next few years proved them 'right.' These people were emboldened, they were promoted and they gained control of ever more capital. Meanwhile, anyone in power who hesitated, who argued for caution, was proved 'wrong.' The cautious types were increasingly intimidated, passed over for promotion. They lost their hold on capital. This happened every day in almost every financial institution, over and over, until we ended up with a very specific kind of person running — Susan Cain

If you're not staying on top of your money, you are putting your financial well-being at risk. — Suze Orman

A wealthy person who never had to rely on help and resources from his community is leading a privileged life that falls way outside more than a million years of human experience. Financial independence can lead to isolation, and isolation can put people at a greatly increased risk of depression and suicide. This might be a fair trade for a generally wealthier society- but a trade it is. — Sebastian Junger

There is a simple way of avoiding excess risk-taking by the managers of our financial institutions. It is to make it a crime ... had a crime for reckless management of a financial institution been on the books, Northern Rock and RBS would not have blown up. — Paul Collier

In financial services, if you want to be the best in the industry, you first have to be the best in risk management and credit quality. It's the foundation for every other measure of success. There's almost no room for error. — John G. Stumpf

The financial crisis has underscored how insufficient attention to fundamental corporate governance concepts can have devastating effects on an institution and its continued viability. It is clear that many banks did not fully implement these fundamental concepts. The obvious lesson is that banks need to improve their corporate governance practices and supervisors must ensure that sound corporate governance principles are thoroughly and consistently implemented. — Daniele Nouy

In the future, financial firms of any type whose failure would pose a systemic risk must accept especially close regulatory scrutiny of their risk-taking. — Ben Bernanke

Just as Wall Street needs to break the hold of the bonus culture, which drives risk-taking that is rational for individuals but damaging to the financial system, so science must break the tyranny of the luxury journals. The result will be better research that better serves science and society. — Randy Schekman

Sustainability is today's freedom crusade, because the next generation will not live free - will not have the freedom to pursue its economic dreams or to delight in all that nature has to offer - if our approach to the financial world and the natural are not grounded in sustainable values. That lack of sustainability will constrict everything in our lives. It will limit everything we might want to do. Unless we become less dependent on hydrocarbons, and unless we find a balance between the need for markets to be free enough to reward innovation and risk-taking but not so free as to reward recklessness that can destabilize the whole global economy, our lives will be reduced, redacted, and restricted. We will be overwhelmed by all the toxic assets we will produce in the Market and in Mother Nature. It will feel worse than had the Soviet Union won the Cold War, because we and our children will be enslaved by our financial debts and constricted by our ecological debts. — Thomas L. Friedman

In sum, economists (and those who listened to them) became overconfident in their preferred models of the moment: markets are efficient, financial innovation improves the risk-return trade-off, self-regulation works best, and government intervention is ineffective and harmful. They forgot about the other models. There was too much Fama, too little Shiller. The economics of the profession may have been fine, but evidently there was trouble with its psychology and sociology. — Dani Rodrik

The Treasury's plan has little for those outside of the financial industry. It is aimed at rescuing the same financial institutions that created this crisis with the sloppy underwriting and reckless disregard for the risk they were creating, taking or passing on to others. — Richard Shelby

As an entrepreneur, I knew that if my company failed, I could always try again. So I often felt that the only real risk of true financial ruin came from the possibility of a serious illness that either exceeded my insurance plans lifetime limits, or was not covered due to rescission. — Eric Ries

This crisis exposed very significant problems in the financial systems of the United States and some other major economies. Innovation got too far out in front of the knowledge of risk. — Timothy Geithner

America is the greatest engine of innovation that has ever existed, and it can't be duplicated anytime soon, because it is the product of a multitude of factors: extreme freedom of thought, an emphasis on independent thinking, a steady immigration of new minds, a risk-taking culture with no stigma attached to trying and failing, a noncorrupt bureaucracy, and financial markets and a venture capital system that are unrivaled at taking new ideas and turning them into global products. — Thomas L. Friedman

Although a single source of risk may create large losses, it is not generally enough to result in an actual disaster. For such an event to occur, several types of risks usually need to interact. Most importantly, the lack of appropriate controls appears to be a determining contributor. Although inadequate controls do not trigger the actual financial loss, they allow the organization to take more risk than necessary and also provide enough time for extreme losses to accumulate. — Thomas S. Coleman

Taking away the risk from the financial sector and taking it on to the public shoulders is not the right approach. — Jeroen Dijsselbloem

As value investors, our business is to buy bargains that financial market theory says do not exist. We've delivered great returns to our clients for a quarter century-a dollar invested at inception in our largest fund is now worth over 94 dollars, a 20% net compound return. We have achieved this not by incurring high risk as financial theory would suggest, but by deliberately avoiding or hedging the risks that we identified. — Seth Klarman

Capitalism has become systemically risky when a single financial algorithm like the one that David X. Li created brought the entire global economic system close to collapse in 2008. — Said Elias Dawlabani

Housing prices had never before fallen as far and as fast as they did beginning in 2007. But that's what happened. Former Federal Reserve chairman Alan Greenspan explained to a congressional committee after the fact, "The whole intellectual edifice, however, collapsed in the summer of [2007] because the data input into the risk management models generally covered only the past two decades, a period of euphoria. Had instead the models been fitted more appropriately to historic periods of stress, capital requirements would have been much higher and the financial world would be in far better shape, in my judgment."3 — Charles Wheelan

In 2008 it was the entire financial system that was at risk. We were still short. But you don't want the system to crash. It's sort of like the flood's about to happen and you're Noah. You're on the ark. Yeah, you're okay. But you are not happy looking out at the flood. That's not a happy moment for Noah. By — Michael Lewis

For a start, the salary begins to have an attraction and addictiveness all of its own. A regular paycheck and crack cocaine have that in common. In addition, and more to the point, working too long for other people can blunt your desire to take risks. This last factor is crucial, because the ability to live with and embrace risk is what sets apart the financial winners and losers in the world. — Felix Dennis

With government deregulation and the triumph of financial liberalization, the dangers of systemic risks, the possibility of a financial tsunami, sharply increased. — Noam Chomsky

Suning Appliance has no problem of financial risk. Do you think I'm risky? I'm definitely not risky. — Zhang Jindong

It's not just professional athletes and soldiers who are at risk from traumatic brain injury. More than 1.7 million people a year sustain a traumatic brain injury, and about 50,000 of them die each year, according the Centers for Disease Control. There are both emotional and financial costs from these injuries. — Anne Wojcicki

Support Your Warriors
I write about warriors; men and women who rise above the rest. Men and women who overcome their fears with courage and integrity. While some of my characters may seem like super heroes, the real life men and women who risk their lives every day to protect and to serve us are truly super heroes. Please support your warriors. There are a variety of worthwhile organizations that need financial support and/or volunteers. Visit a hospital, send a card, say a prayer.
Thank you
Sandy — Sandra J. Yearman

Dreams, in their essence, include risk. This risk could be physical danger (often true in climbing big mountains like Everest), or it could be financial (leaving a comfortable job and pouring your life savings into a business venture), or it could be emotional (like the feelings of loss and questioning that comes with losing friends and coworkers to climbing accidents). — Adrian Ballinger

Given the central role of effective, firmwide risk management in maintaining strong financial institutions, it is clear that supervisors must redouble their efforts to help organizations improve their risk-management practices ... We are also considering the need for additional or revised supervisory guidance regarding various aspects of risk management, including further emphasis on the need for an enterprise-wide perspective when assessing risk. — Ben Bernanke

The full consequences of a default or even the serious prospect of default by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the cost, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns. — Ronald Reagan

For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system. — Henry Paulson

Bullish or bearish are terms used by people who do not engage in practicing uncertainty, like the television commentators, or those who have no experience in handling risk. Alas, investors and businesses are not paid in probabilities; they are paid in dollars. Accordingly, it is not how likely an event is to happen that matters, it is how much is made when it happens that should be the consideration. — Nassim Nicholas Taleb

Structured settlements are a common way for people who have been injured to receive an insurance payout. The periodic payments provide ongoing income and reduce the risk of blowing a lump sum through poor financial choices. — Suze Orman

At a time when going to college has never been more important, it's never been more expensive, and our nation's families haven't been in this kind of financial duress since the great depression. And so what we have is just sort of a miraculous opportunity simply by stopping the subsidy to banks when we already have the risk of loans. We can plow those savings into our students. And we can make college dramatically more affordable, tens of billions of dollars over the next decade. — Arne Duncan

I have found that if I tend to a person's illness rather than to the
person, I am going to treat that person as if they are their illness. In doing so, I run the risk of limiting them greatly and helping them to focus in on their illness as if that is all they are. It is so important to see and help a person and not just a condition. Everyone is different, with unique twists and challenges, so the same herbs are not applied for the same 'condition.' The herbs chosen are connected to the whole personincluding their illness, their constitution, their diet, their psychology, their
history, their tastes, their lifestyle, and their joys and sorrows. I always
try to set a person up to succeed, and take their preferences, abilities, stamina, and financial resources into account when helping choose their plant medicines. — Robin Rose Bennett

Most investors say "Don't take risks." The rich investor takes risks. — Robert Kiyosaki

The banks, because of mismanagement, because of huge risk taking, are now in very vulnerable positions. We can expect that we're gonna have to do more to shore up the financial system. We also are gonna have to make sure that we set up financial regulations so that not only does this never happen again, but you start having some sort of - trust in how the credit markets work again. — Barack Obama

I believe the more personally removed people are from a major financial event, the less it is to affect their appetite for risk. — Ziad K. Abdelnour

No partnership, for that matter, would have hired me, or anyone remotely like me. Was there ever any correlation between an ability to get into, and out of, Princeton, and a talent for taking financial risk? At — Michael Lewis

What we're going to do is redouble our efforts on financial regulatory reform, because that has in it sensible things like say on pay, so at least the shareholders are minding the store, sensible things like saying, for heaven's sakes, compensation should be focused on - on long term, so that you don't have rewards for short-term risk-taking. — Christina Romer

When large companies take on risk, then they impose risks on the rest of the system. And these are systemic risks and these systemic risks we never used to think were really that important, but as soon as we recognize how the financial sector - the risks the financial sector takes on can impact the entire global economy, we realize that those risks needed to be controlled for the social good. — Robert F. Engle

I don't believe that humans can be reduced to homo economicus, but as a group, government officials are remarkably sensitive to financial, political, and reputational costs. Thus, when new technologies appear to reduce the costs of using lethal force, their threshold for deciding to use lethal force correspondingly drops.
If killing a suspected terrorist in Yemen or Somalia or Libya will endanger expensive manned aircraft, the lives of U.S. troops, and/or the lives of many innocent civilians, officials will reserve such killings for situations of extreme urgency and gravity (stopping another 9/11, getting Osama bin Laden). But if all that appears to be at risk is a an easily replaceable drone, officials will be tempted to use lethal force more and more casually. — Rosa Brooks

default swaps on subprime mortgage bonds. Only a triple-A-rated corporation could assume such risk, no money down, and no questions asked. Burry was right about this, too, but it would be three years before he knew it. The party on the other side of his bet against subprime mortgage bonds was the triple-A-rated insurance company AIG - American International Group, Inc. Or, rather, a unit of AIG called AIG FP. AIG Financial Products was created — Michael Lewis

I had come to expect that Chinese friends would make financial decisions that I found uncomfortably risky: launching businesses with their savings, moving across the country without the assurance of a job. One explanation, which Weber and Hsee call "the cushion hypothesis," is that traditionally large Chinese family networks afford people confidence that they can turn to others for help if their risk-taking does not succeed. Another theory is more specific to the boom years. "The economic reforms undertaken by Deng Xiaoping were a gamble in themselves," Ricardo Siu, a business professor at the University of Macau, told me. "So people got the idea that taking a risk is not just okay; it has utility." For those who have come from poverty to the middle class, he added, "the thinking may be, If I lose half my money, well, I've lived through that. I won't be poor again. And in several years I can earn it back. But if I win? I'm a millionaire! — Evan Osnos

A person whose financial requirements are modest and whose curiosity, skepticism and indifference to reputation are outsized is a person at risk of becoming a journalist. — Louis Menand

Network marketing gives people the opportunity, with very low risk and very low financial commitment, to build their own income-generating asset and acquire great wealth. — Robert Kiyosaki

Being an entrepreneur means the ability to think out of the box by putting away our fear of any risk, including financial. — Ciputra

I think for a lot of people, the financial barrier is the biggest leap (that) you have to take. A lot of people don't want to stick their necks out and take that risk which is totally understandable. Until you are ready to totally bet on yourself and put all of your chips on the table, it doesn't happen. — Chris Gethard

While one should never underestimate the ability of risk-besotted financiers to wreak havoc, the real threat to capitalism isn't unfettered financial cunning. It is, instead, the unwillingness of executives to confront the changing expectations of their stakeholders. — Gary Hamel

Nowhere does it say that investors should strive to make every last dollar of potential profit; consideration of risk must never take a backseat to return. Conservative positioning entering a crisis is crucial: it enables one to maintain long-term oriented, clear thinking, and to focus on new opportunities while others are distracted or even forced to sell. Portfolio hedges must be in place before a crisis hits. One cannot reliably or affordably increase or replace hedges that are rolling off during a financial crisis. — Seth Klarman

Congressman Frank and Senator Dodd wanted the government to push financial institutions to lend to people they would not lend to otherwise, because of the risk of default ... The idea that politicians can assess risks better than people who have spent their whole careers assessing risks should have been so obviously absurd that no one would take it seriously. — Thomas Sowell

The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions ... Derivatives have permitted the unbundling of financial risks. — Alan Greenspan

Similar to Churchill's view that "democracy is the worst form of government except all the others that have been tried," although it is by no means a bulletproof theory, the CAPM is the best theory to explain the risk/return relationship that the greatest financial minds have been able to devise. — Matthew Krantz

The same thing happened to me that, according to legend, happened to Parmeniscus, who in the Trophonean cave lost the ability to laugh but acquired it again on the island of Delos upon seeing a shapeless block that was said to be the image of the goddess Leto. When I was very young, I forgot in the Trophonean cave how to laugh; when I became an adult, when I opened my eyes and saw actuality, then I started to laugh and have never stopped laughing since that time. I saw that the meaning of life was to make a living, its goal to be- come a councilor, that the rich delight oflove was to acquire a well-to-do girl, that the blessedness of friendship was to help each other in financial difficulties, that wisdom was whatever the majority assumed it to be, that enthusiasm was to give a speech, that courage was to risk being fined ten dollars, that cordiality was to say "May it do you good" after a meal, that piety was to go to communion once a year. This I saw, and I laughed. — Soren Kierkegaard

[High income tax rates] not only check consumption but discourage investment and encourage ... the avoidance of taxes [rather] than the production of goods.[ ... ]Our present tax system ... reduces the financial incentives for personal effort, investment, and risk-taking. — John F. Kennedy

The received wisdom is that risk increases in the recession and falls in booms. In contrast, it may be more helpful to think of risk as increasing during upswings, as financial imbalances build up, and materializing in recessions. — Andrew Crockett

The biggest profit center for investment banks is the hefty fees they charge for underwriting stock offerings and giving financial advice, and analysts put those profits at risk if they publish negative conclusions about the companies that pay the fees. — Alex Berenson

Do not trust financial market risk models. Despite the predilection of some analysts to model the financial markets using sophisticated mathematics, the markets are governed by behavioral science, not physical science. — Seth Klarman

In the financial markets, however, the connection between a marketable security and the underlying business is not as clear-cut. For investors in a marketable security the gain or loss associated with the various outcomes is not totally inherent in the underlying business; it also depends on the price paid, which is established by the marketplace. The view that risk is dependent on both the nature of investments and on their market price is very different from that described by beta. — Seth Klarman

When I was very young and in the cave of Trophonius I forgot to laugh. Then, when I got older, when I opened my eyes and saw the real world, I began to laugh and I haven't stopped since. I saw that the meaning of life was to get a livelihood, that the goal of life was to be a High Court judge, that the bright joy of love was to marry a well-off girl, that the blessing of friendship was to help each other out of a financial tight spot, that wisdom was what the majority said it was, that passion was to give a speech, that courage was to risk being fined 10 rix-dollars, that cordiality was to say 'You're welcome' after a meal, and that the fear of God was to go to communion once a year. That's what I saw. And I laughed. — Soren Kierkegaard

The four most dangerous words in finance are 'this time is different.' Thanks to this masterpiece by Carmen Reinhart at the University of Maryland and Kenneth Rogoff of Harvard, no one can doubt this again ... The authors have put an immense amount of work into collecting the data financial institutions needed if they were to have any chance of making quantitative risk management work. — Martin Wolf

Risk models are a substitute for historical knowledge, because they tend to work with just three years' worth of data. But three years is not a long time in financial history. — Niall Ferguson

RE: GSEs like Freddie Mac & Fannie Mae: "creditors will continue to underprice the risk-taking of these financial institutions, overfund them, and fail to provide effective market discipline Facing prices that are too low, systemically important firms will take on too much risk." — Gary H. Stern