Living in a Stochastic World and Managing Complex Risks

14 Pages Posted: 2 Oct 2015 Last revised: 13 May 2016

Date Written: July 27, 2015

Abstract

In this paper, we review the concept of risk, its evolution in history and the big changes we experienced in the last 50 years. We conclude that peak risks are growing and the need for risk management is becoming a societal demand. Two phenomena are identified to render risks more complex, increasing interconnectedness of the world and faster time scale whereby actors have little time to adapt. We conclude in showing the complementarity between qualitative and quantitative risk management.

Keywords: extreme risk, risk management

JEL Classification: A10, A12

Suggested Citation

Dacorogna, Michel M. and Kratz, Marie, Living in a Stochastic World and Managing Complex Risks (July 27, 2015). Available at SSRN: https://ssrn.com/abstract=2668468 or http://dx.doi.org/10.2139/ssrn.2668468

Michel M. Dacorogna (Contact Author)

DEAR-Consulting ( email )

Scheuchzerstrasse 160
Zurich, 8057
Switzerland
+41795447327 (Phone)

Marie Kratz

ESSEC Business School, CREAR ( email )

Avenue Bernard Hirsch
BP 50105 CERGY
CERGY, CERGY PONTOISE CEDEX 95021
France

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