Living in a Stochastic World and Managing Complex Risks

PRS Prime Re Solutions: Living in a Stochastic World and Managing Complex Risks, Publication by Prof. Dr. Michel Dacorogna and Marie Kratz

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

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