Value at Risk for dummies: 9 simple rules for risk management – the Risk Metrics campaign

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9 commonsense Rules for implementing Value at Risk


Earlier today, I wrote about the Jorian-Taleb debate on the relative evils of Value at Risk (VAR) frameworks. That debate triggered a classical advertising campaign by Risk Metrics (the Value at Risk dataset company) in 2003 – 2004, much before the 2008-2009 financial crisis.

Here are the 9 risk management rules that Risk Metrics laid out.

9 Rules of Risk Management (Risk Metrics Campaign)

1. There is no return without risk (compensation)

2. Be transparent (understand)

3. Seek Experience (people, not models)

4. Know what you don’t know (question)

5. Communicate (openly)

6. Diversify (distribute)

7. Show Discipline (consistent versus changing strategies)

8. Use Common Sense (approximately right, precisely wrong)

9. Return is only half the equation (tradeoff)

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