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Risk is not a four letter word.
The financial industry, an extremely broad collection of sub-industries, specializes in taking the rich, complicated, interwoven tapestry that is human endeavors and disaggregating it into simple, modelable risks.
Then those risks *get sold.*
The financial industry, an extremely broad collection of sub-industries, specializes in taking the rich, complicated, interwoven tapestry that is human endeavors and disaggregating it into simple, modelable risks.
Then those risks *get sold.*
This is one of the key seeing-like-a-financier skills that I wish entrepreneurs would learn.
People are excessively risk-averse or are handwavy trying to convince counterparties that something is no risk. It's better to enumerate, quantify, and appropriately allocate the risks.
People are excessively risk-averse or are handwavy trying to convince counterparties that something is no risk. It's better to enumerate, quantify, and appropriately allocate the risks.
e.g. If you think it is possible that a product won't be materially adopted, it is worth asking "Hypothetically if it isn't, is that more likely to have been market risk or execution risk?"
This determines how you'd interact w/ team and what things you'd do to cheaply estimate.
This determines how you'd interact w/ team and what things you'd do to cheaply estimate.
(Market risk = "We did everything right but customers just didn't want it." OK, prior to doing everything, go ask customers whether they want it. Execution risk = "Customers would have wanted this but we weren't productive over product cycle." OK, what's a leading indicator?)
