The hottest Risk management Substack posts right now

And their main takeaways
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Top Finance Topics

Quant Letter: June 2025, Week-2

The Parlour • 4 implied HN points • 11 Jun 25
💰 Finance Risk management
  1. A new approach in finance is being developed to deal with model uncertainty, allowing better decision-making with limited data.
  2. Using deep learning and neural networks can help improve the accuracy of options pricing, especially during crucial events like earnings announcements.
  3. Current trends show that integrating climate considerations into investment strategies can be done without losing much performance.

Why "bias for action" is not good enough

The Caring Techie Newsletter • 11 implied HN points • 12 Nov 24
🕹 Technology Risk management
  1. Having a 'bias for action' can be good, but it's not always the right approach. Sometimes, acting without enough thought can lead to bigger problems.
  2. In situations where you don't fully understand the problem, it might be better to wait and gather more information before jumping to conclusions.
  3. Instead of rushing into decisions, take a moment to think things through. Thoughtful action can help you make better choices.

LTCM: 25 Years On

Net Interest • 34 implied HN points • 18 Aug 23
💰 Finance Risk management
  1. The collapse of Long-Term Capital Management had significant implications for the finance industry.
  2. One possible reason for LTCM's downfall was overreliance on sophisticated modeling.
  3. Although LTCM had managed its leverage tightly, it still faced a perilous downfall due to a combination of factors.

Issue #85 | Risk Management Science vs Politics | Wasabi Fraud | Synbio and HFSS Foods Explained | Goats Eating Tomatoes |

The Rotten Apple • 42 implied HN points • 24 Apr 23
🍲 Food & Drink Risk management
  1. Risk management in food safety is more of a political process than a scientific one.
  2. Most wasabi paste we consume is fake, made with horseradish, but still has antibacterial properties.
  3. Synthetic biology in food production and the term HFSS (high in fat, salt, sugar) are emerging concepts in food science.

To hedge or not to hedge, and how to hedge

Klement on Investing • 3 implied HN points • 02 Jul 25
💰 Finance Risk management
  1. Businesses often face unpredictable costs, like oil prices or exchange rates, which can affect their profits. Hedging these costs can help make profits more stable and predictable.
  2. While hedging can reduce risk, it also comes with complexity and potential costs once the hedge expires. Some companies choose not to hedge at all because of this.
  3. Research shows that simply hedging all exposure might work as well as or better than more complicated strategies, so it’s often best to keep hedging simple.
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How To Avoid Losing Your Crypto

DeFi Education • 2 HN points • 13 Mar 24
🔮 Crypto Risk management
  1. Many people lose their crypto profits because they don't sell at the right time. It's important to have a plan to take profits when you can.
  2. Understanding the risks of different products is crucial. Many losses come from not knowing how things like hacks or hidden risks can affect your investments.
  3. Security is key to keeping your crypto safe. This means having good practices in place, like using hardware wallets and being aware of scams and phishing attempts.

SVB: Conflicts of (Insider Loan) Interest

Nongaap Investing • 37 implied HN points • 22 Mar 23
💼 Business Risk management
  1. Silicon Valley Bank faced a significant spike in insider loans, raising concerns about VC conflicts of interest and Director independence.
  2. Approximately 38% of SVB's reported incremental venture debt went to start-ups affiliated with Directors, prompting questions on underwriting transparency.
  3. The lack of disclosure in the Proxy Statement and the concentration of loans to insider-affiliated start-ups suggest potential VC conflicts of interest impacting risk management.

Four minutes

Klement on Investing • 3 implied HN points • 19 Jun 25
💰 Finance Risk management
  1. Many retail investors focus on just a few stocks, creating a big risk in their portfolios. This makes their investments less diversified and potentially more risky.
  2. Research shows that retail investors often spend very little time figuring out which stocks to buy or sell. On average, they only spend about 20 minutes looking into a stock before making a decision.
  3. The most common research method for these investors is to check short-term price movements rather than doing deep analysis. This can lead to making decisions based on trends instead of solid information.

Buying the Dip

reedmolbak • 2 HN points • 05 Mar 24
💰 Finance Risk management
  1. Buying the dip strategy involves waiting for an asset price to drop below a specific threshold before purchasing it, but simulation data shows that this strategy is usually less effective than buying regularly.
  2. When dealing with volatile assets, buying the dip can be beneficial if the asset underperforms in the median case but significantly overperforms occasionally, providing exposure without heavy losses.
  3. For stable assets or normal investors, buying regularly is usually the best strategy as it requires less effort and is generally more effective than trying to time the market by waiting for price dips.

How the Banking System Changed Post-SVB

Apricitas Economics • 32 implied HN points • 05 Jun 23
💰 Finance Risk management
  1. After the collapse of Silicon Valley Bank, the American banking industry is adapting by relying less on uninsured deposits and more on alternative funding methods like borrowings.
  2. Deposits have restabilized post-SVB crisis, but banks are facing challenges with tight lending standards due to renewed economic pessimism and liquidity concerns.
  3. Banks are cautiously navigating post-SVB crisis by reducing reliance on uninsured deposits, managing securities losses, and addressing liquidity worries amid tighter monetary policy.

The damage caused by sea level rise to cities

Klement on Investing • 2 implied HN points • 11 Aug 25
🌞 Climate & Environment Risk management
  1. Sea level rise can seriously damage city infrastructure, making some areas nearly unsellable. Insurance companies struggle to assess risks, especially in places like Miami.
  2. Most climate models suggest that sea levels will rise less than one meter by 2100, which is manageable for cities. However, cities like Osaka may face more significant challenges.
  3. We have three choices: do nothing and risk the worst, speed up efforts to reduce carbon emissions, or adapt our infrastructure to cope with rising sea levels. The future depends on the actions we take today.

Repost: Armed conflict investor survival guide

Klement on Investing • 3 implied HN points • 13 Jun 25
💰 Finance Risk management
  1. Don't panic during geopolitical crises. Most of these events don't affect the stock market in the long run, so it's usually better to stay calm and not sell off shares quickly.
  2. Evaluate the situation carefully by asking key questions about the impact on infrastructure, inflation, and interest rates before making any investment decisions.
  3. In many cases, the smart move is to buy risky assets when they dip, especially if there’s no long-term effect on the economy. Short-term panic selling can create good buying opportunities.

Risk of Ruin

Net Interest • 24 implied HN points • 13 Oct 23
💰 Finance Risk management
  1. Participants in a study about managing financial risk did not fully exploit their edge in a coin-flipping game.
  2. Proper position sizing is crucial in gambling and financial markets to maximize returns and manage risk effectively.
  3. Understanding and applying formulas like Kelly's criterion can help in making optimal bets and improving performance in investing.

Eight steps to a better financial future

A Bit Gamey • 6 implied HN points • 26 Jan 25
💰 Finance Risk management
  1. Cutting back on spending can help you save money without sacrificing enjoyment. Making small, easy cuts can really add up.
  2. It's important to have an emergency fund for unexpected situations. Protecting yourself financially can give you peace of mind.
  3. Invest in your future by researching and learning about different investment options. The more you know, the better decisions you can make.

#39: Remove the plow and hive

The Uncertainty Mindset (soon to become tbd) • 59 implied HN points • 29 Jul 20
💼 Business Risk management
  1. It's important to understand risks properly by knowing all possible outcomes and their chances, instead of just labeling everything uncertain as risky.
  2. Taking small steps and learning from them is better than waiting to act. This helps you understand what's happening as things change.
  3. Being flexible and open to new opportunities is more helpful than trying to make everything super efficient. This way, you're ready when good chances come along.

The hedge funds strike back

The Jolly Contrarian • 39 implied HN points • 19 Feb 21
💰 Finance Risk management
  1. Hedge funds made a comeback after a ruling in a unique case involving an accidental large payment from Citibank to hedge funds on behalf of Revlon, leading to legal battles and appeals.
  2. The case highlighted issues with operational errors, system design complexity, and the application of legal concepts like restitution in contract disputes.
  3. Exploring books on human error investigations and accidents shed light on organizational risks, system failures, and the human factors behind accidents in various industries.

Trading Catastrophe

Net Interest • 5 implied HN points • 21 Feb 25
💰 Finance Risk management
  1. Hurricane Andrew changed how insurers think about risks. They realized they needed better coverage and to assess risk differently.
  2. Catastrophe bonds, or cat bonds, became popular after Hurricane Andrew. They allow investors to earn interest while helping insurers cover major losses.
  3. Today, cat bonds are expanding into retail markets, making them accessible to everyday investors. They have shown good returns, even as disasters become more frequent.

Small, Value, or Small/Value?

Klement on Investing • 2 implied HN points • 22 Jul 25
💰 Finance Risk management
  1. Investors looking to improve their portfolio might want to use a small-cap value fund instead of mixing small-cap and value funds. This approach often leads to better returns despite a bit more risk.
  2. Using one focused fund can help avoid confusion and duplication from multiple investments. It simplifies the investment strategy and is usually more effective.
  3. If you want specific investment factors, it's often best to choose one product that combines those factors, rather than several different ones that might overlap.

Creating a Monster

Net Interest • 26 implied HN points • 02 Jun 23
💰 Finance Risk management
  1. Financial innovation can sometimes have unintended consequences.
  2. Sharing proprietary knowledge can have both positive and negative impacts.
  3. Regulatory changes and mergers can lead to the growth of 'monstrous' financial systems.

[PQ] PLTK: Playing Bad (Governance) Odds

Nongaap Investing • 5 implied HN points • 21 Jan 25
💰 Finance Risk management
  1. Bad governance can sometimes lead to unexpected investment opportunities. It means that when things look risky or poorly managed, there might be a chance for profit.
  2. Investors need to carefully assess the risks before jumping in. Just because something seems like a good deal doesn't mean it won't come with surprises.
  3. Understanding the company's governance and management style is important. Knowing how they operate can help you make better investment decisions.

Arbitrage Betting, Chinese Businessmen & Real-Life Freerolls

Lucky Maverick • 2 implied HN points • 15 Jul 25
💰 Finance Risk management
  1. When the risks are low, it's smart to take more chances and try new things. Don't just focus on being right, but rather on the potential benefits from your experiments.
  2. Arbitrage betting can help you find profitable situations, even if it doesn't guarantee success on both sides. Use it as a way to identify when market prices might be wrong.
  3. Look for 'freerolls' in life where you can gain benefits without much risk. These opportunities can lead to positive outcomes, even if they seem small at first.

Unbundling Cash & Equity

Working Theorys • 19 implied HN points • 06 Sep 23
💼 Business Risk management
  1. Consider unbundling cash and equity to seek them from different opportunities.
  2. There is a tradeoff between cash and equity in compensation offers.
  3. Cash-plus-equity may offer the allure of high equity value, but most startups fail.

When looking at private investments, the past is prologue

Klement on Investing • 2 implied HN points • 24 Jun 25
💰 Finance Risk management
  1. Private investments seem safer because they offer smooth returns, but their true risks might be hidden. Investors need to be careful and look beyond the surface when evaluating these assets.
  2. The way private equity funds show their investment valuations can be misleading. If they only show positive changes and hide the bad news, it can trick investors about how healthy the investments really are.
  3. Small changes in investment valuations can signal much bigger problems later on. Investors should pay attention to valuation updates to predict possible losses in the future.

Data Update 4 for 2022: Risk = Danger + Opportunity!

Musings on Markets • 19 implied HN points • 09 Feb 22
💰 Finance Risk management
  1. Risk is both danger and opportunity. Taking big chances can lead to rewards, but it also comes with the possibility of losing money.
  2. It's important to balance between risk and reward. If you don't expect a good return from a risky investment, you might be wasting your time.
  3. Real risk comes from not knowing the future, not just bad outcomes. It's about the uncertainty of what may happen next.

Day 2: A Comedy of Errors

Malt Liquidity • 6 implied HN points • 04 Nov 24
💰 Finance Risk management
  1. Following rules can be tough, especially in trading. Straying from common advice can lead to mistakes, like taking on too much risk or not using stop losses.
  2. Taking on a large position without proper planning can result in big losses. It's essential to manage your trade size and understand the potential consequences of your decisions.
  3. Trading simulations can be a fun way to learn, but they also have strict limits. It's important to adapt your strategies to fit the rules of the system you're using.

Casting doubt on risk preferences

Klement on Investing • 2 implied HN points • 17 Jun 25
💰 Finance Risk management
  1. A recent study shows that how we measure risk preferences might not be accurate. People might choose safer options because they find complex math hard, not just because they're afraid of taking risks.
  2. Participants in the study reacted similarly whether faced with risky choices or complex ones. This raises doubts about whether traditional risk assessments truly reflect someone's risk tolerance.
  3. The results suggest that some risk assessments might actually measure how much people dislike complicated decisions instead of their real risk attitudes. We need to rethink how we evaluate risk preferences.

February 2025, Week-1

The Parlour • 4 implied HN points • 05 Feb 25
💰 Finance Risk management
  1. The study on Network Linear Covariance Models shows that using GNAR models can help better predict stock price movements in the S&P 500, especially during busy trading times.
  2. Agent-Based Modelling is a new method introduced to simulate financial markets, which can help us understand market behavior more clearly.
  3. These research efforts highlight how machine learning techniques can be applied to finance, providing insights that can improve trading strategies.

Removing crash risk from the carry trade

Klement on Investing • 2 implied HN points • 12 Jun 25
💰 Finance Risk management
  1. The carry trade borrows money from low-interest currencies and invests in high-interest ones, but it can be risky. Many investors fear a market crash when doing this.
  2. Recent research suggests that focusing on currencies from countries with high debt might reduce crash risks. This means there are strategies, like the debtor carry, that could help avoid big losses.
  3. Using a debtor carry strategy can provide similar long-term returns to traditional carry trades but with less risk. This is a useful approach for investors in international bonds or multi-asset portfolios.

Quant Letter: August 2023, Week 4

The Parlour • 17 implied HN points • 24 Aug 23
💰 Finance Risk management
  1. Financial network learning can enhance portfolio profitability and risk management.
  2. The L2GMOM machine learning framework optimizes trading signals.
  3. There is a proposed machine learning algorithm for time-inconsistent portfolio optimization with stocks.

The cost we bear

Apperceptive (moved to buttondown) • 16 implied HN points • 22 Sep 23
🕹 Technology Risk management
  1. Autonomous cars struggle with handling left turns across traffic due to the difficulty in predicting oncoming vehicles' movements.
  2. Human drivers navigate left turns based on social interactions and a higher tolerance for risk compared to autonomous vehicles.
  3. Acceptance of the risks involved in traditional vehicles influences societal readiness for autonomous vehicles, with potential consequences.

Quant Letter: January 2025, Week-3

The Parlour • 4 implied HN points • 15 Jan 25
💰 Finance Risk management
  1. A model for pricing VIX options has proven effective in markets like Germany's power and TTF gas markets. This model uses multiple factors to improve accuracy.
  2. The HJM and Lifted Heston Model aims to connect historical data of futures contracts with current implied volatility. This helps better predict market behaviors.
  3. Understanding these models can enhance strategies in quantitative finance, especially for those working with options and futures trading.

Scenario Planning: Strategy, Steps and Practical Examples

Product Mindset's Newsletter • 11 implied HN points • 28 Jan 24
💼 Business Risk management
  1. Scenario planning helps organizations prepare for a range of possibilities in an uncertain future.
  2. The scenario planning process involves steps like predicting future drivers, understanding impacts, and gauging effects of scenarios.
  3. Best practices for scenario planning include focusing on key uncertainties, keeping it simple, and fostering a culture of resilience.

18/36 :Product Discovery - Risks & Mitigations

Product Mindset's Newsletter • 17 implied HN points • 21 May 23
💼 Business Risk management
  1. Understanding product risks involves assessing the impact of uncertainty on developing a product.
  2. Risk management in IT projects is crucial for maximizing results, effective communication, and allocating funds for high risks.
  3. Managing risks involves identifying, analyzing, and mitigating them through strategies like avoiding, reducing likelihood, and reducing impact.

Ambiguity is worse than risk

Klement on Investing • 3 implied HN points • 19 Feb 25
💰 Finance Risk management
  1. Ambiguity can be more stressful than known risks. When people face uncertain situations about their jobs or income, they tend to invest less in risky assets.
  2. Financial insecurity leads to lower risk-taking in investments. People who feel financially unstable often shy away from stocks, choosing safer options like bonds.
  3. On a larger scale, countries with high financial insecurity may save less, which can worsen their economic situation. Improving financial security could help boost savings and reduce deficits.

Banning Open-Weight Models Would be a Disaster

Coding on Autopilot • 1 HN point • 08 Mar 24
🕹 Technology Risk management
  1. Banning open-weight models could be harmful as it gives individuals, academics, and researchers the ability to innovate and contribute positively.
  2. Open models level the playing field, democratize access to AI technology, and foster competition, innovation, and economic growth.
  3. Regulations should focus on large organizations rather than restricting access to individuals; the focus should be on punishing those who misuse AI technology.

Optimal anxiety?

Joshua Gans' Newsletter • 19 implied HN points • 01 Mar 21
🏥 Health & Wellness Risk management
  1. Public health messaging often aims to create a certain level of anxiety to manage risks effectively.
  2. Anxiety can have personal and health costs, especially for those who cannot avoid risky situations.
  3. Maintaining anxiety as a tool for risk management may disproportionately impact those who are less well-off.