Hypothesis: Risk, like Mass and Energy, Can Neither be Created nor Destroyed.  Discuss

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Quintin and Will imagine the title as an essay question in a final financial examination and use this as a stepping stone to look at issues surrounding risk in financial products, the risk of the form may take, and the difference between perceptions of risk and reality. Questions are also raised about the impressions of risk levels that may be conveyed to clients by advisers and wealth managers.  This article was originally published in the CISI members’ magazine The Review. Republished with permission.

This article has now been republished by the Certificate of Bank Treasury Risk Management as part of their Thought Leadership Series.

BTRMThe Certificate of Bank Treasury Risk Management (BTRM – find out more about the BTRM from their website) is a course designed to empower individuals working in, or intending to work in, every aspect of bank risk management and asset-liability management (ALM). The BTRM is unique in being the only professional qualification for bank Treasury, Finance, and Risk professionals that covers bank ALM, liquidity risk management, hedge accounting, and operational risk.

“BTRM Thought Leadership series is designed to bring to light the latest thinking on the future of banking and finance, including ideas and innovations that will hopefully enable the markets to serve consumers and society better. Recognising that finance is not an exact science and is as much an art, we welcome qualitative articles aimed at practitioners interested in a best-practice and honest approach to banking. Articles may focus on any area of economics, finance, and banking and should be between 1500 and 3500 words. We encourage accessibility, transparency, and clear language.”

Q G Rayer and W Dickson (2017), Hypothesis: Risk, like Mass and Energy, Can Neither be Created nor Destroyed.  Discuss, CISI, The Review of Financial Markets, issue 13, p6-8, Quarter 2, May 2017.

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