Risk and Reward


What is a Risk?

The quantifiable likelihood of loss or less-than-expected returns.  

What is a Reward?

It is something given or received in return or recompense for service, merit, hardship, etc. 


The recent "near-closure" of the European air space due to volcanic ash has allegedly resulted in a loss of 1.7 Billion US$ to airlines. (Now, do such airlines take insurance for covering such risks?)

Here is an interesting comment from a newspaper on this incident. This comments urge people, companies, and nations, to be less cautious and conservative, and be more open to risks - considering the rewards that its offers.

We are becoming a risk-averse society and that is dangerous. You cannot run a national economy on the precautionary principle; indeed, the sound position is to embrace as much risk as possible. Societies that embrace risk, such as the United States and recently the UK, tend to thrive, while those that seek to minimize risk, such as Britain during the 1970s, tend to wither.
–The Times, 21 April 2010 

Another comment on the Global Warming fiasco also highlights the "unnecessary" risk  people take in such matters.

Rational decisions have to be taken on the basis of some empirical understanding of the risks involved, and on the balance between risk and reward (or the cost of avoiding risk). Exposing the nonsense and muddle of the so-called precautionary principle is an essential part of the GWPF’s declared mission ‘to bring reason, integrity and balance to a climate debate that has become seriously unbalanced, irrationally alarmist, and all too often depressingly intolerant’. If the argument now raging over the policy response to the volcanic ash clouds assists in achieving this, it will demonstrate that ash clouds, too, have a silver lining.  

My view point :

In the first case, since a lot of lives are at stake, better be safe than sorry. 

In the second case, no comments, since I'm completely uninformed about this Climate Change Theory. However, my gut instinct says that the guys have overdone the Climate Change Threat.

Check up an interesting article on Risk. 

And an interesting video on Risk, Reality, Reward - explaining how in the real, complex world, the best and the sophisticated mathematical models can fail - which was unarguably illustrated in the Volcanic Ash crisis.
Risk and Reward Risk and Reward Reviewed by Vyankatesh on Sunday, May 02, 2010 Rating: 5

1 comment:

  1. Risk is a tricky question, measured risk should be part of any economic plan but assuming to much risk can lead to a very bad situation. Change is much more important. If you accept change & welcome it into your life you will continue to find new answers to old questions.

    As far as climate change, the earth has gone through many climate adjustments throughout it's history & this may be just one more but do we really want to take the chance? We have changed the world because of our presence...shouldn't we take responsibility for that do what we can to limit our impact?

    Thanks for the information,

    Bill

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