The hottest Risk management Substack posts right now

And their main takeaways
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Top Finance Topics

When prospect theory and poker bubbles collide

The Leap • 1 HN point • 12 Sep 24
🎾 Sports Risk management
  1. In poker tournaments, players often face decisions that can greatly affect their outcomes. Choosing whether to play it safe or take risks can make all the difference in winnings.
  2. Prospect theory shows that people view gains and losses differently, often fearing losses more than valuing equivalent gains. This means players may avoid risks, even when the potential rewards are greater.
  3. Even though playing aggressively didn't work out this time, taking calculated risks can lead to bigger rewards in the long run. Balancing risk and safety is important in both poker and life.

George Soros - the basics.

Philoinvestor • 98 implied HN points • 27 May 23
💰 Finance Risk management
  1. The Theory of Reflexivity explains how perceptions influence situations and vice versa.
  2. Markets can be far from equilibrium due to changing rules and reflexive connections.
  3. Temporary solutions in the market are just that - temporary and likely to resurface.
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Frame AI risk using the NIST RMF

Deploy Securely • 98 implied HN points • 09 Jun 23
🕹 Technology Risk management
  1. The NIST AI Risk Management Framework provides a governance, risk, and compliance framework for artificial intelligence.
  2. The document highlights the challenges in AI risk management, including identifying and cataloging risks, emergent risks, and availability of reliable metrics.
  3. The criteria to evaluate AI systems include validity, safety, security, accountability, transparency, privacy, and fairness in managing harmful bias.

When Models Drive a Hard Bargain

The Counterfactual • 79 implied HN points • 20 Nov 23
🕹 Technology Risk management
  1. Incentives heavily influence how people and AI behave. When personal goals clash with social expectations, it creates tension that needs to be managed.
  2. AI systems, like large language models, can produce deceptive behaviors without being explicitly programmed to. Their strategies can be affected by the goals they are trying to achieve.
  3. Using games as testing environments could help identify desirable and undesirable behaviors in AI. The more varied the tests, the better we understand how an AI might behave outside of those tests.

Third-Party Security Risks

Rod’s Blog • 39 implied HN points • 04 Mar 24
🕹 Technology Risk management
  1. In the interconnected business landscape, managing third-party risks is crucial to protect sensitive information. Careful vendor selection, effective risk management strategies, and strong contracts can help minimize risks.
  2. Third-party risks can lead to severe consequences like financial losses, legal liabilities, reputation damage, and regulatory penalties. This highlights the importance of proactively addressing these risks.
  3. Common types of third-party risks include data breaches, system compromises, non-compliance with regulations, and supply chain disruptions. Understanding and mitigating these risks are key for organizational security.

What is financial leverage?

Concepts of Finance 🧠 • 139 implied HN points • 13 Jul 23
💰 Finance Risk management
  1. Financial leverage is when you borrow money to invest, potentially increasing both your profits and risks. It's like using a loan to buy a house, where you hope the value rises higher than what you owe.
  2. Different people and companies use leverage for various reasons, like individuals buying homes, companies expanding operations, or investors trying to make bigger profits in the stock market. But with the chance of higher gains comes the risk of bigger losses.
  3. The financial leverage ratio helps assess how much debt a company uses compared to its own money. A high ratio can mean a company is at risk if it can't pay back its debts, while a low ratio might suggest it's in a safer position.

Drawdowns Will Happen

Spilled Coffee • 48 implied HN points • 23 Jul 25
💰 Finance Risk management
  1. Drawdowns in investments are inevitable, meaning at some point, your portfolio will likely drop in value. This happens to every investor, so be ready for it.
  2. Long-term investing often includes dealing with painful drawdowns, which can test your patience and confidence in your strategy. It's important to not allow fear to make you question your decisions during these times.
  3. To prepare for drawdowns, have cash on hand, understand your investment timeline, and base your decisions on how much risk you can handle. Remember, volatility is a normal part of investing.

NFTX Overview

DeFi Education • 619 implied HN points • 24 Oct 21
🔮 Crypto Risk management
  1. NFTX allows NFT owners to deposit their NFTs into a vault and get a token in return, which can be traded. This helps make NFTs more liquid and allows owners to get quick cash when needed.
  2. NFTX differs from similar platforms by offering a user-friendly experience and has no current fees in its first version. In the future, they may add ways to earn income through governance decisions.
  3. The protocol is still in its early stages and faces competition from other upcoming marketplaces. However, if NFTX can implement single-sided staking, it might see significant growth.

A Digital Scouts Honor

Resilient Cyber • 19 implied HN points • 09 May 24
🕹 Technology Risk management
  1. The Secure-by-Design Pledge encourages software companies to make their products more secure, focusing on goals like using multi-factor authentication and reducing default passwords. This means companies are promising to create safer software for everyone.
  2. The pledge is voluntary, which means companies are not legally required to follow these guidelines. While this relies on their honesty, it raises trust issues since there's no enforced accountability.
  3. Many big names in tech have signed this pledge, which is a positive step. But it's crucial for more non-security-focused companies to join in for real change to happen in improving software security.

WNXM Case Study: Breakdown of an Asymmetric Trade

DeFi Education • 559 implied HN points • 22 Nov 21
🔮 Crypto Risk management
  1. In the DeFi market, emotion and attention drive prices, creating unique opportunities for investments. It's important to explore less popular projects that address real problems, like decentralized insurance.
  2. Nexus Mutual offers insurance coverage for smart contract risks through a unique structure that includes legal status for token holders. This makes it a safer investment compared to many other crypto-assets.
  3. A profitable trading strategy involves buying WNXM tokens when they're undervalued, wrapping them, and redeeming them for ETH when the capital pool is healthy. Quick actions can lead to low-risk, high-return investments.

The Repo Market Blindspot

Concoda • 475 implied HN points • 25 Jul 23
💰 Finance Risk management
  1. Monetary leaders are delving into the secretive world of the Repo Market Blindspot.
  2. Following the 2008 crisis, efforts were made to stabilize the global dollar paradigm.
  3. The focus is now on regulating the non-centrally cleared bilateral repo market to prevent potential instability.

If people talk about a bubble, it’s unlikely to crash soon

Klement on Investing • 3 implied HN points • 20 Jan 26
💰 Finance Risk management
  1. It’s very hard to identify a stock bubble in real time, so you usually can’t be sure a bubble exists until after the fact.
  2. Media coverage and investor worries aren’t a reliable signal of imminent crashes; the press often misses bubbles or only calls them out after prices have already fallen.
  3. Even when a bubble exists, stocks can linger near their peak for months or even more than a year before a big drop, so crashes can be delayed and unpredictable.

In Tackling Near-Term AI Risks, Old-School Monitoring and Filtering Have Value

Risk Musings • 401 implied HN points • 30 Sep 23
🕹 Technology Risk management
  1. Old-school monitoring and filtering techniques can be valuable in addressing immediate AI risks.
  2. Implementing data loss prevention (DLP) strategies can help prevent data leakage into AI systems.
  3. Monitoring software with a focus on tracking uncertainties in large language models can be a useful tool to reduce falsehoods in AI-generated content.

A Modern Look at an Old Banking Risk

The Sunday Morning Post • 78 implied HN points • 09 Jul 23
💰 Finance Risk management
  1. Bank runs can still happen today, triggered by various factors like social media rumors and liquidity issues
  2. The FDIC, established in 1933, guarantees a certain amount of depositors' funds to prevent bank runs and provide stability to the banking system
  3. Modern banking faces new challenges like swift fund transfers, online activism affecting stock prices, and the need for regulators to adapt to the changing landscape

Harness AI

Deploy Securely • 78 implied HN points • 28 Jul 23
🕹 Technology Risk management
  1. StackAware has pivoted to AI risk management.
  2. Deploy Securely is now the official blog of StackAware.
  3. A new email course highlighting StackAware's revised value proposition has been launched.

ESG's Russia Test: Trial by Fire or Crash and Burn?

Musings on Markets • 379 implied HN points • 28 Mar 22
💰 Finance Risk management
  1. ESG might not be as helpful as it claims. Many companies that invested based on ESG ratings still lost money when Russia invaded Ukraine.
  2. There are three groups within the ESG movement: revisionists who think ESG can fix everything, expansionists who want to add more criteria, and utopians who still believe in its potential despite issues.
  3. The way ESG is measured and its goals can be unclear. This confusion can lead to companies just pretending to be good instead of actually improving their practices.

The Platform Risk

Tiny Empires • 49 implied HN points • 29 May 25
💼 Business Risk management
  1. Don't rely too much on platforms you don't own because they can change rules suddenly. Build your own website and email list to keep control.
  2. Create a safety net by spreading your revenue across different platforms. This way, if one platform changes, your business won't fall apart.
  3. Always stay in touch with your audience through multiple channels. This keeps you connected, even if some platforms go away.

Cloud Compliance - At the Speed of Government

Resilient Cyber • 119 implied HN points • 05 Jun 23
🕹 Technology Risk management
  1. Federal cloud compliance processes take a long time, as seen with FedRAMP taking almost three years to update its security baselines to align with NIST 800-53 revisions.
  2. Cloud service providers have a very short timeframe to adapt to these updates, which creates a confusing double standard where industry has to move faster than the government.
  3. While there's a growing focus on securing the software supply chain, cloud service providers were unregulated in this area for years, despite their crucial role in cybersecurity.

Software Transparency

Resilient Cyber • 119 implied HN points • 30 May 23
🕹 Technology Risk management
  1. Software supply chain attacks are increasing rapidly, with a reported rise of 742% in the last three years. This highlights the need for better security measures in software development.
  2. The book discusses various strategies for managing supply chain risks. It covers topics like vulnerability databases, software bills of materials (SBOM), and practical guidance for both suppliers and consumers.
  3. There is a growing push for software transparency to address systemic risks. This involves collaboration between development, security, and operations, as well as understanding regulations and emerging best practices.

Silenced Warnings

The Radar • 39 implied HN points • 19 Jan 24
💼 Business Risk management
  1. Ignoring warnings can lead to significant consequences in any endeavor.
  2. Desensitization to repetitive cues can result in catastrophic loss.
  3. Leaders should encourage open challenge and avoid an autocratic approach to prevent missing important cues that could save the organization.

CBW Fights FDIC's $20.5 Million Penalty That Could "Imperil" Its Existence

Fintech Business Weekly • 89 implied HN points • 05 Jan 25
💰 Finance Risk management
  1. CBW is facing a huge $20.5 million fine from the FDIC, which could put its future at risk. This penalty is due to failures in its anti-money laundering practices.
  2. A small Kansas bank, CBW, has made a lot of money from international services but hasn't fixed issues raised by regulators in past reviews. They were supposed to improve but didn't make significant changes.
  3. The FDIC argues that the situation with CBW highlights serious compliance problems in the banking sector. They are trying to enforce rules to prevent money laundering, especially in high-risk areas.

Alternative Investment Guide #1 - Art

Concepts of Finance 🧠 • 99 implied HN points • 25 Jun 23
💰 Finance Risk management
  1. Art investing can be a lucrative opportunity, with some estimates showing returns of around 9% to 14%.
  2. The art market is large and valued at over $1.5 trillion, but it can be tricky for newcomers due to its complexity and the influence of wealthy insiders.
  3. There are more ways than ever to start investing in art, including art funds and fractional ownership, making it accessible for beginners.

Sign Here on the Dotted Line

Resilient Cyber • 119 implied HN points • 01 May 23
🕹 Technology Risk management
  1. The Federal government is focusing on secure software development, requiring software suppliers to prove they follow certain security practices. This means companies must show they are making software safely before selling it to federal agencies.
  2. Software developers must also consider how they use open-source software, as they need to show they manage risks associated with those components. This makes them responsible for any issues that might arise from using other people's code.
  3. Additionally, there is a process where companies can report if they can't meet all the secure practices. This allows them to explain any gaps in compliance and outline their plans to fix them later.

Little Lamb, who made thee? The Archegos Affair, part 2.

The Jolly Contrarian • 119 implied HN points • 28 Dec 22
💰 Finance Risk management
  1. Regulatory margin rules can sometimes worsen financial crises by inadvertently enabling risky behaviors such as concentrated fund positions.
  2. In complex organizations, there is a difference between the appearance of good governance and actual effective risk control. Overemphasis on formal structures may lead to overlooking practical risk management.
  3. Organizations should balance formal risk control infrastructure with experienced, nuanced decision-making, rather than relying solely on rigid systems.

2025 Portfolio Results

Subsack • 4 implied HN points • 04 Jan 26
💰 Finance Risk management
  1. The portfolio delivered strong returns (about 28% YTD) and beat the S&P by roughly 10%, with healthy CAGR and Sharpe, but remained closely tied to the market (beta ~1.05) and a tariff-driven drawdown lowered the Kelly %.
  2. Holdings are split into a risk-on sleeve of thematic growth baskets (AI, pharma, semiconductors, crypto, etc.) and a risk-off sleeve of low-volatility, high-dividend assets, rebalanced quarterly; position sizing uses Hierarchical Risk Parity with a denoised correlation matrix which improved outcomes versus other weighting methods.
  3. Planned improvements include moving to Interactive Brokers for broader market access, mining simple low-volatility/high-Sharpe strategies with VectorBT and probabilistic Sharpe analysis, and adding tools like earnings-call sentiment, options panels, and a bio-pharma catalyst strategy to enhance edge.

Data Deep Dive: Predicting China's Exports Using AIS Vessel Tracking Data (+ Other Uses)

The Data Score • 59 implied HN points • 28 Jun 23
🕹 Technology Risk management
  1. AIS vessel tracking data can predict China's exports, monitor global trade, and understand real-time economic activity.
  2. Data cleansing is crucial for turning raw AIS data into actionable insights. Cleaning the data involves filtering out anomalies and ensuring accuracy.
  3. It's important to consider limitations like the exclusive focus on large commercial ships, uncertainties in cargo data, and vessel behavior anomalies when analyzing AIS data.

The Paradox of Finding Surprising Insights in Alternative Data

The Data Score • 59 implied HN points • 22 Jun 23
💼 Business Risk management
  1. Institutional investors need to find surprising insights in data but also be skeptical of them to ensure accuracy and avoid errors.
  2. When using alternative data to make predictions, it's crucial to verify if the insights answer the right questions and differ from the market consensus.
  3. Digging into the data through various methods like independent validation, error margin assessment, and data integrity checks is essential for investors to ensure the reliability of surprising insights.

Walk Your Talk

do clouds feel vertigo? • 1 HN point • 31 Aug 24
💰 Finance Risk management
  1. Navigating emotions in finance is tough. Just like a story, the market has ups and downs, often driven by fear and greed.
  2. Understanding market patterns can help you make better choices. Key events, like earnings reports, can change how stocks perform quickly.
  3. It's smart to think about who benefits from market movements. Often, the loudest voices can mislead you, so keep a clear perspective.

Risk Tolerance is Earned

Superfluid • 92 implied HN points • 30 Oct 24
💼 Business Risk management
  1. Risk tolerance grows by taking small risks over time. You don't have to make huge moves right away; start with little steps to build your confidence.
  2. Working in a challenging environment, like a startup, can push you beyond your comfort zone. This can help you find what really matters to you in your career.
  3. Stability is often a goal for many, especially for those with immigrant backgrounds. However, it's important to aim high and take calculated risks to discover new opportunities.

Careers: Aligning Stated and Revealed Preferences

Moral Mayhem Podcast • 19 implied HN points • 13 Mar 24
💼 Business Risk management
  1. Many people think their career paths are more straightforward than they actually are. It's okay to change jobs if you're not happy, as often the risks are lower than you think.
  2. People sometimes stay in jobs longer than they should because they're worried about making a change. Remember, doors don't completely close and new opportunities often arise.
  3. Anxiety about career choices can feel overwhelming because of how much we tie our value to work. However, this fear usually doesn't match the reality of risk when trying something new.

Don't Plan For the Worst

The Radar • 19 implied HN points • 10 Mar 24
💼 Business Risk management
  1. Planning for the worst may not be the best strategy for intelligently allocating resources.
  2. Organizations often over-invest resources in low-percentage operational scenarios, leading to unnecessary pressure.
  3. Quantify the costs and payoffs of different scenarios to ensure that resources are mapped to value and not solely based on worst-case fears.

What happens if we apply KCOR to financial markets?

Steve Kirsch's newsletter • 2 implied HN points • 11 Jan 26
💰 Finance Risk management
  1. A fully algorithmic, long-only U.S. large-cap equity strategy was derived from the KCOR framework and designed for low turnover, no leverage, and tax efficiency with only two tunable parameters.
  2. A 2000–2025 hypothetical backtest shows very large compounded returns and final equity growth, but it also involved extreme volatility, deep drawdowns, and the results are unaudited and not guaranteed.
  3. Live trading began with preliminary gains but the track record is short, the strategy remains high-risk and may underperform, and any investment interest is being directed to accredited or qualified investors only.