What is the difference between risk and uncertainty?
In the latest instalment of our Radical Old Idea series, taking place on Wednesday January 25 at 1300, economist and author John Kay will explore the differences and what they mean for finance in an interview with series host Kaisie Rayner.
As he explains in his recent book Radical Uncertainty, authored with former Bank of England governor Mervyn King, risk refers to situations which are not precisely known but can be modelled with some accuracy, like the roll of a dice. Radical uncertainty, by contrast, is those events which were "outside the model", such as a global pandemic, or a war.
As the world economy seeks to recover from two major such events, we ask why finance struggles to deal with them, and whether it can improve.