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Richard Bookstaber on Fintech, Diversification and the Volatility Paradox

Fintech Beat

CHAPTER

The Difference Between Material Risk and Day to Day Market Risk

The key idea of material risk is to focus on those sorts of risks. If you're an individual, rather than an institution, what matters to you is a very small subset of what seems to matter in world generally. You could shut it all off and not have any difference in the relevant decision making. Fact, you probly bit be better off. In fact, there's certain events that occur that look pretty apocalyptic if you are a hedge fund, but don't matter if you're a longer term i'm so the key idea of Material Risk is tofocus on those sorts Of risks,. ah, to know what to ignore, and to know what matters.

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