Thursday, 9 January 2020

09:20-10:30

Key Economic Challenges of Our Times

Professor of Economics, New York University’s Stern School of Business

Moderated by: Ridham Desai, Managing Director, Morgan Stanley

While the short-term outlook for advanced economies and emerging markets is mixed, there are longer term economic challenges that most countries face. Roubini argues that we live in a world of change, risks, disruptions and uncertainties that need to be managed properly to ensure global economic prosperity and financial stability.

 

15:00-16:00

Taming Uncertainty

Director of the Center of Adaptive Rationality (ARC), Max Planck Institute for Human Development

 

In real life we overwhelmingly deal with situations of uncertainty rather than situations of risk (with risk being situations in which we know possible outcomes of our behaviors and their probabilities). In situations of uncertainty, however, surprises can happen, meaning unexpected / unpredicted events happen. Most of our models, however, including models of risk in investment decisions are models that assumes that probabilities are known or can be reasonably estimated.

In the world of uncertainty, unlike in world of risks, simple strategies—heuristics— perform surprisingly well—in fact they often outperform computationally more complex models

The speaker will illustrate this conjecture

(a) in the world of strategic interactions

(b) in investment decisions (Markowitz’s mean variance model vs. 1/N naive diversification

(c) in investment decisions by laypeople (risk simulator)

(d) across a range of business decisions (e.g., hiatus heuristic).

Finally, the speaker will also point out the limits of heuristic decision making.

16:00-16:30

Unexpected Places to Understand Risk

 

Moderated by: Sunil Singhania, CFA, Founder of Abakkus Asset Management

What unusual risk takers can teach us about risk in uncertain times? It feels like we face more risk and uncertainty than ever before. Even our traditional tools, low risk bonds aren’t offering the same protection they used to because their yields are so low. The good news is we have strategies that work, but we need to understand them better and employ them in more creative ways. I have collected stories of risk management in unusual places to help us. Some of the stories I’ll share include:

1.  What sex workers can tell us about estimating risk premiums and the risk-free rate

  • How to know how much risk to take when risk-free gets expensive

2.     What celebrity photographers can tell us about diversification

  • Deepening our understanding of systematic and idiosyncratic risk in a changing market

3.  What big wave surfers can tell us about the benefits and pitfalls of risk management.

  • Insurance, hedging and dealing with systemic risk

These stories can enhance our understanding of risk in financial markets, they also help communicate the value of wealth management.

08:15-09:00

Registration

09:00-09:20

Conference Opening and Welcome

 

Message on behalf of CFA Society India
Navneet Munot, CFA
Chairman, CFA Society India
CIO, SBI Funds Management Pvt. Ltd.

Message on behalf of CFA Institute
Nick Pollard
Managing Director, Asia Pacific
CFA Institute