TY - JOUR T1 - The Flaws in Today's Energy Economic Analysis JF - The Journal of Structured Finance SP - 22 LP - 27 DO - 10.3905/jsf.2002.320284 VL - 8 IS - 3 AU - Joel S Gilbert Y1 - 2002/10/31 UR - https://pm-research.com/content/8/3/22.abstract N2 - 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. ER -