Rules of Risk Management

There is no return without risk
- Rewards go to those who take risk

Be transparent
- Risk should be fully understood

Seek experience
- Risk is measured and managed by people, not mathematical models.

Know what you don’t know
- Question the assumptions you make

Communicate
- Risk should be discussed openly.

Diversify
- Multiple risks will produce more consistent rewards.

Show discipline
- A consistent and rigorous approach will beat a constantly changing strategy.

Use common sense
- It is better to be approximately right, than to be precisely wrong.

Return is only half the equation
- Decisions should be made only by considering the risk and return of the possibilities.