The authors extract a few key lessons from the current financial crisis: It pays to bear in mind that models are imperfect approximations of reality; the bigger an economic bubble gets, the more unpredictable, severe, and widespread the ultimate fallout becomes; liquidity of assets such as mortgages can evaporate with blazing speed. Everyone from individuals to governments could save more in good times to provide a cushion when the bad times arrive—because ultimately, high-risk financial practices can become everyone's problem.
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About the Author(s)
Susan J. Forray
The democratization of risk management
The authors extract a few key lessons from the current financial crisis It pays to bear in mind that models are imperfect approximations of reality the bigger an economic bubble gets, the more unpredictable, severe, and widespread the ultimate fallout