Is it Brexit Uncertainty or Risk?



With all of the uncertainty surrounding the Brexit hoopla I thought it would be wise to take a second and be sure we are properly distinguishing between risk and uncertainty:

"Risk is a known set of possible future outcomes with known probabilities, while uncertainty is an unknown set of possible future outcomes with unknown probabilities. Both can be present in any opportunity.  Risk can be overcome by only undertaking projects with risk adjusted returns or transferred to another party by purchasing insurance or options.  Uncertainty, however, is an entrepreneurs domain and can create unexpected losses or  real opportunity, profit, and community enhancement."

Comments

Post a Comment

Popular posts from this blog

Focus, Focus, Focus Your Business

Unfortunately more often than not we see businesses that not only aren't able to focus on their profitable core, but they often aren't even able to articulate what their profitable core is. Fortunately this is fixable. It's easy to get distracted by glittery opportunity after opportunity that adds revenue to the top line but distracts from the company's ability to grow its profitable core.  Many business owners fall into the trap of thinking that they are bringing X in profit to their company by chasing a peripheral opportunity when in reality they may be losing 2X in profit because their most profitable core is eroding. But don't take it from us.  These quotes from turnaround expert Gary Sutton in his book The Six-Month Fix pretty bluntly hammer the point home: The last, and most toxic comment you'll hear in most troubled businesses is silence. That will be the response you'll here when you ask each executive to fill in the blank for this sentence. ...
Read more

Modern Aviation Adventure Rescue

As a pilot I just can't resist reporting on a good aviation adventure story. Science Magazine and numerous other news sources are reporting about the emergency rescue of an ill researcher at the South Pole.  A Twin Otter has left Canada and is on its way to the rescue now.  The trip will take multiple days and the final leg will be a 10 hour flight while only 12 to 13 hours of fuel are on board. Because of the harsh weather and darkness, a rescue like this during the Antarctic winter is usually not possible and has only been attempted twice before. You can watch the progress here . I'll be watching anxiously and praying for the health of the researcher and the success of the brave flight crew.
Read more

Searching for Global Economies That Foster Private Company Prosperity: An Exploration of Chile

Image
In the Economics courses I teach each semester, before we dive into the mechanics of supply and demand and after we establish what the science of economics is, we discuss the various types of economic systems around the world.   We spend at least a couple of classes discussing the economies of the world on a spectrum between those that are command and those that are market economies.   One source we use to feed our discussions is the Index of Economic Freedom , which ranks the economies of the world. About five years ago many of my students assumed that the United States was at or near the very top of the list.   They were wrong (as I had also been before diving deeper into the facts).   The United States left the index's highest “Free” category in 2010 and has been in the lower “Mostly Free” category ever since.   ( Interestingly, as an anecdote of how public perception has changed, today most of my students come to class expecting...
Read more