The Economists

In finance, there is a critical distinction between risk and uncertainty. Risk can usually be quantified by using implied volatility from options markets to assess downside potential. Uncertainty is difficult to quantify. The Federal Reserve’s actions to fight inflation may create uncertainty in the coming year. Transition analysis is exceptionally difficult and with transitions in climate, geopolitics, post-pandemic pattern shifts, inflation, and demography happening simultaneously and interacting with each other, it is no wonder we are navigating a world of elevated uncertainty and struggling to quantify the risks.