The trouble is that the risks that are being hedged very…
“The trouble is that the risks that are being hedged very well by new financial securities are financial risks. And it appears to me that the real things you want to hedge are real risks, for example, risks in innovation. The fact is that you'd like companies to be able to take bigger chances. Presumably one obstacle to successful R&D, particularly when the costs are large, are the risks involved.”
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
Financial instruments often hedge only monetary risks, neglecting the real uncertainties of innovation and R&D.
In simple terms: Financial hedges miss real innovation risks.
Key Takeaway
Address real risks directly.
Themes
finance
innovation
risk management
Mood
analytical
critical
Type
economic
strategic
When to use this quote
- venture capital
- corporate R&D
- policy making
- investment decisions
Key Concepts
risk hedging
R&D funding
uncertainty
financial securities
Questions to Reflect On
- How can firms balance financial hedging with embracing innovation risk?
- What policies encourage taking bigger chances?
A Different Perspective
Financial tools cannot replace the need for risk‑tolerant culture.