In situations where knightian or fundamental uncertainty

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1) If you assume that the risk world in which your company operates is ergodic when in fact it is non-ergodic, what problems can arise?How important is the ability to quantify or measure risk to the task of managing risk?

2) "For some, the crisis [of 2007-2009] has shattered faith in the precision of models and their inputs. They failed Keynes's test that it is better to be roughly right than exactly wrong."Quote fromThe gods strike back: A special report on financial riskin The Economist February 13, 2010.Discuss.

3) In situations where Knightian or Fundamental Uncertainty exists, must we conclude that there is no way that these risks can be managed or mitigated?

Reference no: EM13479992

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