When dealing with volatile financial markets, IIASA researchers with the Financial Risk/Rational Adaptation project note that risk environments are constantly shifting between four distinct forms and that no single risk strategy is productive for all situations. That is the premise of the project, which brings the anthropological theory of risk to bear on traditional financial risk theories.
The anthropological approach is critical because the responses of investment firms to risk are often determined by risk managers who fall into one of four types: pragmatists, conservators, maximizers, and managers. Project researchers propose that the best approach in a shifting risk environment is not to follow a path prescribed by one particular type of manager, but to listen to voices from all four types to ensure that the decision making is “clumsy.” A clumsy process means all points of view are heard, and that each is responsive to the others.
IIASA researchers are working with Willis Re, a global reinsurance brokerage firm, to implement this clumsy decision making process as a “rational adaption” approach to a high-risk marketplace.
Last edited: 25 September 2015
2011 - 2014
International Institute for Applied Systems Analysis (IIASA)
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