The hottest Risk management Substack posts right now

And their main takeaways
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Top Finance Topics

We Need More FUD

The Security Industry • 18 implied HN points • 17 Feb 23
🕹 Technology Risk management
  1. CISOs should not adopt the board's language but focus on educating and evoking emotions to get support
  2. Board members often make decisions based on emotions rather than data or risk metrics
  3. Instilling fear through education can be an effective way for CISOs to get the necessary resources

What happens to stocks after an inflation shock?

Klement on Investing • 3 implied HN points • 14 Jan 25
💰 Finance Risk management
  1. Stocks usually drop about 4% in real value after a sudden inflation shock. This happens because investors get worried about future profits.
  2. Not all companies respond the same way to inflation. Companies with high profit margins can handle inflation better than those with lower margins.
  3. To prepare for inflation shocks, it's smart to focus on companies that have high markups and strong cash flow. These companies are generally more resilient.

Meta v. Bright Data Perspectives: A Data Score Interview with Glacier Networks

The Data Score • 1 HN point • 20 Feb 24
💼 Business Risk management
  1. The court ruling in the Meta v. Bright Data case may lead to more defenses against web scraping and offers clarity on accessing public data while underscoring the importance of adhering to individual website terms.
  2. Before starting a web mining project, individuals should carefully review each website's terms, assess intended usage of scraped data, and consider the legal implications of accessing specific content.
  3. Upcoming court cases, like those involving Meta and other companies, may set standards for web mining governance while Glacier Network emphasizes a standardized risk policy to simplify data exchange and compliance in a rapidly evolving data industry.

Faith and Finance

We're Gonna Get Those Bastards • 8 implied HN points • 24 Feb 24
💰 Finance Risk management
  1. Being a skeptic is common, but having faith can lead to more financial success in the market.
  2. Acting on faith can sometimes bring greater returns than waiting for concrete evidence in financial decisions.
  3. Faith can reduce fear and stress when making trades in the market, providing a sense of assurance even when outcomes are uncertain.

Bad year? Increase risk. Good year? Do the same.

Klement on Investing • 3 implied HN points • 08 Jan 25
💰 Finance Risk management
  1. Hedge fund managers often take more risks after a bad performance to try and recover losses. This can lead to excessive risk-taking because they don’t lose more than what's already lost.
  2. Interestingly, top-performing hedge fund managers also increase their risks, possibly due to overconfidence or wanting to attract more investor money.
  3. The way hedge fund fees are structured can encourage these risky behaviors, which might not be in the best interest of investors.
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Time to Panic?

Confronting the Future • 2 HN points • 12 Mar 23
💰 Finance Risk management
  1. Silicon Valley Bank faced a major bank failure, leading to significant implications in the banking sector.
  2. Depositors should be prioritized in bank resolutions to maintain stability and prevent mass panic.
  3. Bank runs can have widespread consequences, requiring regulators to ensure depositor confidence and prevent systemic failures.

Margin of Safety

Axial • 7 implied HN points • 26 Feb 24
💰 Finance Risk management
  1. Investing success involves focusing on undervalued securities with a margin of safety to protect against errors and volatility
  2. Prioritize avoiding losses over seeking speculative gains; learn from others' mistakes to compound returns over time
  3. Value investing requires independent thinking, estimating intrinsic value, and maintaining a margin of safety to achieve excess returns

The Leveraged Sellout

Malt Liquidity • 12 implied HN points • 10 May 23
💰 Finance Risk management
  1. The financial system is composed of equity, currency, and debt, with debt providing liquidity to trust.
  2. Interest rates compensate for the risk on loaned capital, and every lending act inherently contains some risk.
  3. Deposit banking and investment banking serve different clients, with depositors being stakeholders in their bank's success.

A guide to navigating quarterly noise-flow

Buggy Humans in a Messy World • 1 HN point • 15 Jan 24
💰 Finance Risk management
  1. The most reliable path to adequate returns involves buying good businesses at fair valuations and holding onto them for the long term.
  2. View each quarter as part of a continuing trajectory instead of in isolation, placing importance on long-term trends over short-term fluctuations.
  3. Focus on controllables like relative performance, balance sheet metrics, and wider error bands around long-term trends for better analysis of quarterly results.

Value Investing I: The Back Story

Musings on Markets • 19 implied HN points • 23 Oct 20
💰 Finance Risk management
  1. Value investing does not have a single definition; different investors have their own ways of approaching it. Some focus only on low price-to-earnings or book value, while others consider management quality and market conditions.
  2. There are different styles of value investing like contrarian investing, where you buy stocks that have dropped in price, or activist investing, where you aim to change company management to unlock value. Each has its own strategy for finding value.
  3. The belief that value investing is the best way to achieve long-term success comes from both success stories and academic support. Many investors follow this philosophy because it combines strong principles and practical results.

Trump tariff reprieve could create more risk in Treasury market

Klement on Investing • 1 implied HN point • 29 May 25
💰 Finance Risk management
  1. A recent court ruling said Trump overstepped his authority with tariffs. This decision might not help the Treasury market as much as people think.
  2. The news of the tariff reprieve comes with increased risk for investors. They need to be cautious moving forward.
  3. Overall, this situation shows how political decisions can impact financial markets. Keeping an eye on these changes is important for investors.

Reading: How Big Things Get Done

Wetware Snippets • 5 implied HN points • 11 Mar 24
💼 Business Risk management
  1. Modularization is key in project management. Breaking down a large project into repeatable modules simplifies delivery.
  2. Different projects have distinct distribution patterns, impacting their likelihood of success. Thin-tailed distribution projects are more likely to be on time and budget.
  3. Lessons from the book can be applied to personal projects like kitchen renovation or holiday planning. It's a valuable read for project managers and those tackling significant endeavors.

#156 - Silicon Valley Bank: An Autopsy

Below the Line from Kevin LaBuz • 7 implied HN points • 26 Mar 23
💰 Finance Risk management
  1. Silicon Valley Bank grew rapidly and reached the 16th largest bank in the US, but struggled with managing its growth.
  2. Banks make money by taking deposits and making loans, operating with fractional reserves and managing a balance between liquidity and lending.
  3. SVB's downfall was fueled by a combination of poor decisions, rising interest rates, and a concentrated deposit base that led to a rapid collapse.

CRE Me a River

Malt Liquidity • 5 implied HN points • 07 Sep 23
💰 Finance Risk management
  1. Real estate market belief in constant growth can lead to risky investments
  2. Commercial real estate market faces challenges with liquidity and valuation
  3. Overreliance on real estate investments can have negative economic impacts

Higher bank capital requirements work

Klement on Investing • 1 implied HN point • 20 Feb 25
💰 Finance Risk management
  1. Banks now have to keep more money in reserve, which helps prevent risky behavior and protects the economy. This rule came after the 2008 financial crisis.
  2. Even though higher capital requirements may lower banks' profits, they do not slow down overall economic growth. The economy remains stable without large drops in growth.
  3. Overall, increased capital requirements reduce the chances of serious economic downturns, which is a big win for financial stability. It seems like this regulation is working well.

January 2019 Data Update 5: Hurdle Rates and Costs of Financing

Musings on Markets • 19 implied HN points • 24 Jan 19
💰 Finance Risk management
  1. Hurdle rates are important because they help companies decide whether to invest in a project. They reflect the risks involved and the expected returns for different funding sources.
  2. Businesses face various types of risks like business, financial leverage, country, and currency risks. Understanding these risks helps in accurately calculating the cost of capital.
  3. It's crucial to maintain consistency in currency analysis, adjusting for inflation and risk, as it affects investment evaluations. Choosing a currency should not change the project's perceived risk or outcome.

January 2019 Data Update 1: A reminder that equities are risky, in case you forgot!

Musings on Markets • 19 implied HN points • 03 Jan 19
💰 Finance Risk management
  1. Investing in stocks comes with risk, and it’s important to remember that not every dip in prices is a chance to buy. Stocks can lose value, and there are reasons why they usually offer higher returns than safer investments.
  2. The equity risk premium, which tells us how much investors are being paid to take on the risk of stocks, has increased recently. This might suggest that stocks are undervalued compared to historical norms.
  3. Looking ahead, market conditions could be challenging with potential slowdowns in economic growth and global crises. Understanding these risks helps investors make more informed decisions.

Investing Whiplash: Looking for Closure with Apple and Amazon!

Musings on Markets • 19 implied HN points • 03 Dec 18
💰 Finance Risk management
  1. When investing, it's smart to set rules to avoid emotional decisions, like using limit orders to fight against personal biases.
  2. Intrinsic value of stocks can change over time, influenced by both company performance and broader market conditions.
  3. Investors should be flexible in their strategies, being willing to sell sooner if prices align with their valuations, even if it means not holding forever.

European stocks offer earnings stability in surprising places

Klement on Investing • 1 implied HN point • 08 Jan 25
💰 Finance Risk management
  1. European stocks can provide surprisingly stable earnings even in tough times. It's good to look for companies that have shown consistent growth before.
  2. In this uncertain economic climate, having a strategy can help investors feel more secure. Focusing on steady performers might be a smart approach.
  3. Many investors are looking for ways to adapt and manage risks this year. Finding reliable stocks in Europe could be part of the answer.

How big is the equity risk premium?

Klement on Investing • 1 implied HN point • 11 Dec 24
💰 Finance Risk management
  1. Institutional investors are more sensible than retail ones. They adjust their expected returns based on market conditions, increasing them during declines and lowering during rallies.
  2. Pension funds tend to use higher risk premium values compared to other institutional investors. This is likely due to their need to show that their assets can cover their liabilities.
  3. There's a wide range of expected equity risk premiums among different asset managers. Some have very pessimistic views on US equities, while others are much more optimistic.

Breaking: Lineage Hit With FDIC Consent Order

Fintech Business Weekly • 2 HN points • 23 Feb 24
💰 Finance Risk management
  1. Lineage Bank faced regulatory issues with the FDIC due to oversight failures in its banking-as-a-service partnerships.
  2. The consent order from the FDIC requires Lineage Bank to make significant changes in its management, risk assessment, and operational practices.
  3. The impact of Lineage Bank's BaaS wind down and the FDIC order on Synapse, Synctera, and their fintech clients is not yet clear.

Managing private equity portfolios

Klement on Investing • 2 implied HN points • 13 Feb 24
💰 Finance Risk management
  1. Private equity managers have unique challenges in balancing portfolio concentration for high returns and diversification to manage risk.
  2. Private equity portfolio characteristics differ from those of listed equity funds, with smaller, riskier holdings often generating the most alpha.
  3. Performance in private equity is less about individual deals and more about portfolio construction, where fund manager skill plays a significant role.

The Trader's Inherent Vice

Malt Liquidity • 1 implied HN point • 30 Oct 23
💰 Finance Risk management
  1. Every good trader should want to bet more, despite the risks involved.
  2. Rogue traders in finance can operate as a 'fourth-wall break' showing the gambling aspect behind the industry.
  3. In a highly automated trading environment, even small unauthorized changes to models can have significant financial impacts.

Edition 22: A framework to securely use LLMs in companies - Part 2: Managing risk

Boring AppSec • 1 HN point • 13 Aug 23
🕹 Technology Risk management
  1. Using third-party LLM providers can offer advantages like minimal setup complexity and experimentation with low upfront costs.
  2. Challenges with third-party LLMs include concerns about data security, biases in responses, and potential cost overruns.
  3. To manage risks when integrating LLMs, consider implementing an LLM gateway for traffic routing, regular auditing and testing, and a monitoring layer for usage.

Alert: Central Bank of Nigeria Circular PSM/DIR/PUB/CIR/001/039

RegAlert • 0 implied HN points • 27 Jun 23
💰 Finance Risk management
  1. The Central Bank of Nigeria issued guidelines for contactless payments in the country, aiming to standardize operations and promote innovation while ensuring financial system stability.
  2. Banks, financial institutions, and payment service providers are required to adhere to these guidelines, implement risk management processes, and maintain relevant standards for contactless payments.
  3. Participants in contactless payments in Nigeria must download and adhere to Circular PSM/DIR/PUB/CIR/001/039 available on the Central Bank of Nigeria's website.

How to build an optimal portfolio?

Reminiscences Of A Young & Naïve Financier • 0 implied HN points • 21 Feb 23
💰 Finance Risk management
  1. Risk and return are interconnected in investing - higher risk typically means higher expected return.
  2. Diversification is key to building an optimal portfolio - uncorrelated assets help to reduce risk while maintaining returns.
  3. Asset classes like Gold, even with historically low returns, can play a vital role in a diversified portfolio due to their uncorrelated benefits.