vault backup: 2025-12-08 16:37:36

the-failure-of-risk-management.md

@@ -1,19 +1,26 @@
 ---
 id: the-failure-of-risk-management
 aliases: []
+title: _The Failure of Risk Management_
 tags:
   - authorship/original
   - destiny/permanent
   - status/complete
   - topic/risk
   - type/media-commentary
-title: _The Failure of Risk Management_
 ---
 # _The Failure of Risk Management_
 
-The Failure of Risk Management
-(Why It's Broken and How to Fix It)
-by Douglas W. Hubbard
+This is the commentary companion to [[hubbard_2020_failure]].
+
+_The Failure of Risk Management_ (abbreviated here as tFoRM)
+
+tFoRM is has two chief concerns:
+
+* introducing actuarial methods to industries other than insurance.
+
+* discrediting arguments against the use of actuarial methods
+    in industries other than insurance.
 
 ## Mentioned Topics and Abbreviations
 
@@ -22,7 +29,7 @@ by Douglas W. Hubbard
 * Actuarial Science
 * Options Theory (OT)
 * Modern Portfolio Theory (MPT)
-* Probabalistic Risk Analysis (PRA)
+* Probabilistic Risk Analysis (PRA)
 * Value at Risk (VaR)
 * Loss-Exceedance Curve (LEC)
 * Risk Tolerance
@@ -39,6 +46,7 @@ but not referred to as such.
 
 As it is most commonly understood,
 risk _always_ implies a negative impact.
+Analyses that suggest otherwise are unhelpful.
 
 For boolean cases,
 risk can be represented as a vector of **probability** and **loss**.
@@ -112,7 +120,7 @@ where $Pr$ is the probability of Payoff.
 
 Expert opinion is valuable, but its weaknesses must be compensated for.
 
-<!-- TODO: -->
+%% TODO: %%
 
 Experts tend to be good at creating heuristics,
 but do not apply them consistently in practice.
@@ -251,3 +259,18 @@ Hubbard's dismissal rubs me wrong
 because it reads exactly as he describes the
 "at least we're doing _something_" argument
 throughout the book and just pages earlier.
+
+## _Loss Models_
+
+[[hubbard_2020_failure]] is obviously inspired in some part
+by [[klugman-et-al_2019_loss-models]] and its prior editions,
+which is strange because neither the text nor Klugman
+are mentioned in the text.
+
+The opening line of _Loss Models_,
+
+> [!quote] [[klugman-et-al_2019_loss-models#1.1.1 The Modeling Process]] (emphasis added)
+> The model-based approach should be considered
+> _in the context of the objectives of any given problem._
+
+is just [[#_Exsupero Ursus_]].