Week 40 Day 3: Risk vs. Uncertainty: Calculable vs. Unknowable

Risk is when you know the probabilities: a coin flip has a 50/50 chance. Uncertainty is when you do not know the probabilities: the chance of a new pandemic, a technological singularity, or a geopolit...

Risk is when you know the probabilities: a coin flip has a 50/50 chance. Uncertainty is when you do not know the probabilities: the chance of a new pandemic, a technological singularity, or a geopolitical reshuffling. Most investment models measure risk but ignore uncertainty -- the unknowable events that actually cause the biggest losses.