We are experiencing new weather patterns that our models haven’t been designed to handle and the same problem exists in the world of finance
is a keynote speaker, independent wealth management consultant and author of three books on investing and decision-making.
The “one-in-100-year flood” terminology stems from risk modelling, where the likelihood of a given event is assigned a statistical probability. What we are witnessing is the breakdown of such models in the face of growing uncertainties. . Under current financial models, such an event would be statistically impossible. Yet it happened . Just like in Europe’s floods, the models didn’t account for the real-world complexities and uncertainties.
In practical terms, this means abandoning the assumption that extreme events will remain rare. Instead, governments should review and rework processes so resilience and slack are built in and financial institutions should stress-test portfolios against extreme scenarios.
Model World Event Uncertainty Models Risk Lottery Resilience Goldman Goldman Sachs Vienna
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