Risk Management of Invisible Risks

China Business Knowledge @ CUHK Luncheon Series

Risk Management of Invisible Risks

One of the fundamental roles of financial institutions is to manage risks. Risk management often makes assumptions on an underlying distribution of events and relies on statistical inference models to assess their impact. However, in social and economic settings, we often do not know the distribution of events. Even if we know the historical distribution of market returns, there is no way to be sure that the distribution of future returns will remain the same.

Based on his research, Prof. Michael Zhang reveals that uncertainty can be decomposed into pure risk (outcome uncertainty), pure ambiguity (distribution uncertainty), and their interactions. His research results have great implications on black swan events and fat-tailed distributions which are particularly pressing in the market with quantitative models and the future application of artificial intelligence.

With decades of experiences in risk assessment, Mr. Patrick Ip will share his insights on the practical measures we can take to minimize potential risks, with real-life examples of past black swan events.


Prof. Michael Zhang Xiaoquan

Associate Dean (Innovation and Impact), CUHK Business School

Associate Director, Hong Kong-Shenzhen Finance Research Centre

Prof. Michael Zhang is a Professor of Decision Sciences and Managerial Economics at The Chinese University of Hong Kong. He holds a PhD in Management from MIT Sloan School of Management, an MSc in Management, a BE in Computer Science and a BA in English from Tsinghua University. Before joining the academia, he worked as an analyst for an investment bank, and as an international marketing manager for a high-tech company. He holds a US patent, and cofounded several companies in Social Networking, FinTech, and LegalTech.

Mr. Patrick Ip Koon-tung

Managing Director, Jiufu Group

Patrick has been working in the financial and banking industry for over 31 years. He has been employed by Japan Leasing, Citibank, Credit Lyonnaise, Standard Chartered Bank, American Express Bank, Hang Seng Bank and Industrial and Commercial Bank of China

Read our post-event article here.

Want even more insights?

Enjoy the best and most relevant articles monthly with a subscription to CBK's digest.