Prepare for risks of market turmoil, consultants warn
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“The events of the last two years have demonstrated that risk management cannot afford to stop at the 95th percentile. We need to find a way to include very unlikely, but potentially high impact, events,” Watson Wyatt said in the report.
Its 15 extreme risks were ranked in order as of mid-year.
They were economic depression, hyperinflation, excessive leverage, a currency crisis, a banking crisis, sovereign default, climate change, political crisis, insurance crisis, protectionism, disunity in Europe, the end of capitalism, the end of fiat money, war and a killer pandemic.
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As for the end of capitalism, Watson Wyatt said gold was the best holding, but admitted that in such circumstance “investors should probably worry more about the return 'of' their investments than the return 'on' their investments.”
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Jim |
