Author: Ron Dembo

In 1979, American IT company Electronic Data Systems were worth about $1 billion. Their head, Ross Perot, wanted to invest in a small computer company to supply software. After searching around, they discovered the young Bellevue software company Microsoft, but when Bill Gates asked for $40–60 million, they flat out rejected him.

In 2020, Microsoft’s net income was $44.28 billion, and Gates was the second richest man in the world (behind Amazon’s Jeff Bezos).

Perot later said, “I consider it one of the biggest business mistakes I’ve ever made… I should have just said, ‘Now Bill, you…


Author: Ron Dembo

Canadian real estate developer Paul Reichmann saw billions of dollars flow through his hands while transforming the city skylines of Toronto, New York and London. By the time he died on October 25, 2013, his family’s real estate business Olympia & York counted the World Financial Center in Lower Manhattan and Canary Wharf in London’s East End among its achievements.

An Empire Built on Risk

At their height in 1991 Paul and his two brothers held 8% of New York City’s commercial office space. That was double the amount of the Rockefellers, their nearest rival. And, in…


Source: Scary for Kids, Halloween Stories

I am sitting in the middle of Bismark sea off the coast of Papua New Guinea eating my breakfast. To my left at the breakfast table is Charlie Veron, one of the world’s most preeminent scientists on extinction.

We are on our way to see some ocean vents where pure carbon dioxide is leaking from the ocean floor — a reminder that we are sitting on the edge of a ring of fire, one of the most active volcanic areas of the world.

It is always true that the future is here for us to see. We only have to…


Author: Ron Dembo

Eggs in the basket; cash in hand; rainy day funds — whatever you like to call it, having liquidity is an easy hedge against the unknowable risks of a radically uncertain world.

When I started my former company, Algorithmic's, I remember people introducing me as a serious risk taker. I could see why. I had no experience managing a company, nor had I ever been out of academia. But I never thought of myself as such. …


Author: Ron Dembo

A year after the devastating Tubbs Fire in Northern California, in October 2018, I was driving through an area of burned forest the fire had raged. I had been invited to give a keynote speech at the conference of the California Independent System Operator (CAISO) to discuss risk thinking. As I drove, I saw work crews from PG&E installing new transformers on the burnt ground, in exactly the same part of the forest through which Tubbs Fire had spread and which was just as prone to drought and fire as it had been a year ago.

A…


Author: Ron Dembo

Throughout California in the United States, wildfires frequently devastate large swaths of forest and encroach on residential areas, forcing evacuations and even costing lives. Most of the time, lightning causes the fires to start, striking foliage dried out by severe heatwaves that are the result of Climate Change.

But on occasion, one of the power lines from Pacific Gas and Electric (PG&E), the state’s largest utility provider, will brush up against improperly managed vegetation and spark a fire, destroying private property and causing significant environmental damage for which the company is liable.

An Unhedged Bet

California law…


Author: Ron Dembo

Like many in the entertainment industry, The Shaw Festival in Ontario faced a bleak outlook for 2020. Over a typical year the theatre company generated $220 million in economic activity. But as Covid-19 swept across Canada and the rest of the world at the opening of the year and millions lost their lives, lockdowns came into place and workplaces ground to a halt. Many institutions faced bankruptcy. But The Shaw Festival came through it unscathed. How did they do it? They were the ultimate risk thinkers! …


Author: Ron Dembo

Often, a system fails because it mistakenly attempts to apply a deterministic solution to a radically uncertain or stochastic situation. When you face uncertainty, there’s often no ‘correct’ or ‘perfect’ solution to a problem — no perfect hedge that can save you from all the potential downside or a course of action that can infallibly capture the maximum upside. So you need a strategy that can handle uncertainty: you need risk thinking.

Take Airport Security, For Example

The American solution is to have a rules-based system that tries to mitigate potential risks with a set of questions…


Author: Ron Dembo

As a species, we’re generally quite an optimistic bunch. Faced with overwhelming amounts of scientific data on climate change telling us that we are boiling our planet, the majority of people still believe we can fix it.

But not John Foster. To concerned but generally positive reviews, his 2014 book, After Sustainability, suggests that we are all collectively being misled by the ‘myth’ of sustainability.

This collective narrative of sustainable development is, he argues, a form of denial so deeply imbued in our society by corporations and the mainstream media that we have failed to realize two…


Author: Ron Dembo

Pledging to go carbon zero is currently all the rage for governments around the world.

Back in October 2018, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) estimated that to have even a 50% chance of keeping global warming in check, global emissions would have to hit net zero by 2050.

In response, a swathe of countries including the United Kingdom, France, Denmark, and New Zealand have made legal commitments to reach net-zero greenhouse gas emissions.

But perhaps most surprisingly of all, in September 2020 China — currently the world’s largest emitter and biggest climate laggard…

riskthinking-ai

Riskthinking.AI develops new standards, forward-looking data, ratings and algorithms for the latest science-based measurement of climate financial risk.

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