PT - JOURNAL ARTICLE AU - Joel S Gilbert TI - The Flaws in Today's Energy Economic Analysis AID - 10.3905/jsf.2002.320284 DP - 2002 Oct 31 TA - The Journal of Structured Finance PG - 22--27 VI - 8 IP - 3 4099 - https://pm-research.com/content/8/3/22.short 4100 - https://pm-research.com/content/8/3/22.full AB - Risk portrayal using traditional financial metrics is accurate only when risks are symmetric, when averages reflect what can be expected, and when the likelihood and consequences of things going well are reasonably similar to the likelihood and consequences of things going poorly. Financial risk management in today's economic environment often misses two key points: First, according to the “flaw of averages,” common metrics use averages to describe things that are not fairly represented by the average. Second, when people try to build a business case for a concept, they tend to compromise conservatism and withhold worst-case scenarios. Managers of today's businesses that face so-called “asymmetric risks” should consider refining the ways they develop and evaluate their capital and operational plans.