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Risky Business I - The Energy Industry's Relationship with Risk
The energy industry is fraught with risk. Firms in this industry recognize they must take risks to generate earnings. However, some firms fail to adequately manage that risk. Between January 2016 and March 2018, a total of 144 oil and gas producers filed for bankruptcy protection. This article explores how energy firms embrace, and sometimes succumb, to risk.
Authors: Adam Hoffman, Kevin Paley and Michael Patterson
Risky Business II - The Coming Volatility
A fresh look at volatility: why it is an important metric for investments of all types, how it is measured, its underlying assumptions, and how those assumptions affect its utility.
Adam Hoffman and Michael Patterson
Risky Business III - The Myth of VaR
The finance industry, and the commodity trading industry in particular, have come to rely heavily on Value at Risk (VaR) to quantify portfolio risk. This article explores the formulation, the computation, and the limitations of VaR. This article illustrates the often severe consequences of over-relying upon VaR, and methodologies to supplement VaR.
Adam Hoffman and Kevin Paley