Dr. Rudiger Kiesel
Chief,
Energy, Trading & Financial Services
University
of Duisberg-Essen
Prof. Rudiger Kiesel, Chief of
Energy, Trading and Financial services at the University of Duisberg-Essen,
visited MYRA School of Business on July 17, 2015. He was here to give a talk under the banner
of InSight Lecture Series at MYRA.
Uncertainty, Probabilities and
Risk, a subject of great importance in risk management was the topic of the
day.
Prof. Kiesel said Risks in a
business environment can have known probabilities, unknown but existing
probabilities as well as uncertain probabilities. While in the case of the first two
categories, it is possible to develop strategies for prevention and management
of risk, the third category has to depend entirely on mathematical
modeling.
It is important to first
understand the risks before generating a model to counteract it, he said. He explained that the first step, therefore,
is to make an inventory of the risks and get a measure of the risks that the
company is exposed to. We have to then
categorize the risks and analyze the same.
Finally, examine the alternatives available to manage each type of risk and
bring in the design, appropriate instruments and expertise to neutralize / deal
with the risk.
Risk models are those models that
rely on assumptions and estimates and are the basis for risk measurement and
its management. He discussed general approaches and tools for quantifying model
risk. He deliberated upon a common risk
management strategy – ‘Hedging’- which is used in limiting or offsetting
probability of loss from fluctuations in the prices of commodities, currencies
or securities. We can modify the way we
fund assets to reduce risk exposure or buy insurance. It is also used in protecting one’s capital
against inflation through proper investment, he said.
He took examples from real life
situations to validate his talk. The
event was well attended by the management students, invitees from the Department
of Statistics, University of Mysore, BEML and others. Prof. Shalini Urs chaired the session and Prof.
Sumant Bakshi, Advisor, MYRA delivered the vote of thanks.