This presentation examines risk and decision making, showing how misunderstandings can lead to common mistakes. Using examples drawn from the statistical figures for breast cancer, drug trials, and the criminal defense of O.J. Simpson, Dr. Chance discusses how probability can be misunderstood and misused. Attention is also paid to how risk is covered in the media and how to avoid the common risk mistakes of overweighting highly improbable events and underweighting highly probable ones.

 

Professor Chance holds the William H. Wright, Jr. Endowed Chair for Financial Services at the Ourso College of Business at Louisiana State University. He was formerly First Union Professor of Financial Risk Management at Virginia Tech and prior to his academic career, he worked for a large southeastern bank. Professor Chance has had numerous articles published in academic and practitioner journals and has authored three books: An Introduction to Derivatives and Risk Management (8th ed., 2009) co-authored with Robert Brooks, Essays in Derivatives: Risk Transfer Tools and Topics Made Easy (2nd ed., 2008), and Analysis of Derivatives for the CFA Program. He is often quoted in the media on matters related to derivatives and risk management as well as financial markets and the economy in general. Professor Chance is a frequent consultant to companies, organizations, and law firms and has extensive instructional experience in professional training programs. He is an adviser to IndexIQ, a New York-based provider of strategic index products, and The Governance Fund, a Minnesota-based investment manager. His current research is primarily focused on executive stock options but he also works on problems in derivatives in general as well as in indexing and exchange-traded funds. Professor Chance holds a PhD in finance from LSU and is a CFA charterholder.