Accidents Quote by David Einhorn
“A 99% Value-at-Risk calculation does not evaluate what happens in the last one percent... This is like an airbag that works all the time, except when you have a car accident.”
About This Quote
Source Speech: Investor Conference, 2020
It warns that VaR ignores extreme tail risks, similar to an airbag that fails when needed.
In simple terms: VaR misses rare catastrophic events.
Key Takeaway
Consider stress testing beyond VaR.
Themes
risk management
statistics
finance
Mood
cautious
analytical
Type
financial
educational
When to use this quote
- portfolio analysis
- stress testing
- risk reporting
- regulatory compliance
Key Concepts
tail risk
probability
risk modeling
Questions to Reflect On
- How do you protect against rare, high‑impact events?
- What alternatives complement VaR?
A Different Perspective
VaR may still be useful for routine risk but not for rare shocks.
