After engaging in risk management, I gradually realized that risk and finance are mysterious and ubiquitous, and we should always be in awe of risk. Professor Chen Zhiwu has a wonderful conclusion: "The history of human beings is the history of human beings constantly struggling with risks, and the history of civilized development is the history of the progress of means and tools to avoid and reduce risks." At that time, it was reasonable, but when Bernstein discussed the history of human civilization in "Enemy with Heaven", he asserted that "the revolutionary thought of defining the dividing line between modern and past is to grasp risks". After reading this, I can't help being shocked and thinking deeply about it, which I never realized, and it also made me re-recognize and think about risks. He also mentioned that when the first member of mankind thought about tomorrow's survival, human understanding of risk had already begun, and human understanding of risk had also made the progress of human civilization.

Croce, a westerner, said that "all history is contemporary history" and all financial history is a history of risk management. Looking back on the history of modern finance, while people have made brilliant achievements in the financial market, they may often forget the pain, ignore the risks and repeat the same mistakes from time to time. Perhaps it is the greedy performance of capital profit-seeking, as Marx said: "If there is a profit of 100%, capitalists will take risks; If there are 200% profits, capitalists will despise the law; If there are 300% profits, then capitalists will trample on everything in the world! "... the most rational human elite may fall into the fog of risk in the face of profit. Long-term Capital Management (LTCM) was established in February 1994. It is a hedge fund mainly engaged in arbitrage activities of fixed-rate debt instruments. Headed by meriwether, it is known as the father of Wall Street debt arbitrage. He gathered a group of elite securities traders from Wall Street to join him. In this elite team, he gathered professional superstars, big coffee investors and Nobel Prize winners, and was called the "dream team". Scholes and Merton, winners of the Nobel Prize in Economics, organically combined the historical transaction data of financial markets, existing market theories, academic research reports and market information to form a relatively complete automatic investment model of computer mathematics. During the period of 1996, the yield of LTCM reached 57% and the annual profit was $2 1 100 million. 1997, despite the outbreak of the Southeast Asian financial crisis, the LTCM yield is still 25%. Its net assets reached $4.8 billion, with an average annual growth rate of 40%. During the period of 1998, from the Russian financial crisis in May to September, its net asset value fell by 90% in just 150 days, resulting in a huge loss of $4.3 billion, leaving only $500 million in capital. Finally, the Federal Reserve came forward to organize and arrange, and 15 international financial institutions headed by Merrill Lynch and JPMorgan Chase invested $3.725 billion to buy 90% equity of LTCM, and * * * took over LTCM, thus avoiding its bankruptcy. It turned out that LTCM never imagined that the financial storm of Russian bond default triggered global financial turmoil, and LTCM's computer automatic investment system mistakenly enlarged the operation scale of financial derivatives in the face of such a neglected small probability event. As a result, the company suffered huge losses. The enlightenment is that there is no magic weapon in the financial market, and there are defects and misunderstandings in any analysis method and operating system, which may lead to risks and even survival crises. The tragic LTCM case can remind us that "there are two things, and the more you think about them repeatedly and persistently, the more they will fill your mind with growing new admiration and awe: shiny finance and its ghostly risks." "