The Known, the Unknown, and the Unknowable in Financial Risk Management: Measurement and Theory Advancing Practice

By Francis X. Diebold; Neil A. Doherty et al. | Go to book overview

12. The Role of Corporate Governance
in Coping with Risk and Unknowns

Kenneth E. Scott

The concern of this book is with financial risk management: the known, the unknown and the unknowable. There may not be complete agreement on what that encompasses. For my purpose, I would define risk as the possible occurrence of a future event (state of nature) that has a significant financial consequence for a decision maker. Depending on your particular position, your primary focus might be on the management of risk by financial institutions, or on the oversight of that management by government agencies regulating financial institutions, or on businesses in their operations or dealings with financial institutions and transacting partners. My perspective will mostly be centered on the latter.

Further, the book's theme is the utility of classifying risks as known (K), unknown (u) and unknowable (U). The use of those terms varies among authors. In the absence of full consensus, one can only make clear his own usage. I view those risks in terms of a probability distribution, with the KuU classes lying along a continuum of knowledge about the density function and how it is generated. The polar K example might be an honest roulette wheel, while the polar U example would be an event that no one is even thinking about. There is no sharp definitional line to be drawn, but we can have varying degrees of confidence in our understanding of the mean and variance (and other parameters) of the distribution in question.

-277-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited page

Bookmark this page
The Known, the Unknown, and the Unknowable in Financial Risk Management: Measurement and Theory Advancing Practice
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this book
  • Bookmarks
  • Highlights & Notes
  • Citations
/ 380

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.