---
title: "Meaning & Key Takeaway of: The trouble is that the risks that are…"
description: "\"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 thing..."
image: "https://sms4smile.com/quotes/i/4d4/kenneth-arrow-14948_able_the-trouble-is-that-the-risks-that-are-b_547180.jpg"
---

#  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…” quote by Kenneth Arrow](https://sms4smile.com/quotes/i/4d4/kenneth-arrow-14948_able_the-trouble-is-that-the-risks-that-are-b_547180.jpg)   [Download](https://sms4smile.com/quotes/i/4d4/kenneth-arrow-14948_able_the-trouble-is-that-the-risks-that-are-b_547180.jpg) [Open image](https://sms4smile.com/quotes/i/4d4/kenneth-arrow-14948_able_the-trouble-is-that-the-risks-that-are-b_547180.jpg)

> “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.”

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

## 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.

★ ★ ★ ★ ★   No ratings yet

[Chance](https://sms4smile.com/quotes/about/chance/) [Company](https://sms4smile.com/quotes/about/company/) [Facts](https://sms4smile.com/quotes/about/facts/) [Financial risk](https://sms4smile.com/quotes/about/financial-risk/) [Financial security](https://sms4smile.com/quotes/about/financial-security/) [Innovation](https://sms4smile.com/quotes/about/innovation/) [Money](https://sms4smile.com/quotes/about/money/) [Obstacles](https://sms4smile.com/quotes/about/obstacles/) [Risk](https://sms4smile.com/quotes/about/risk/) [Security](https://sms4smile.com/quotes/about/security/) [Successful](https://sms4smile.com/quotes/about/successful/)

## Related quotes

> [The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning…](https://sms4smile.com/quotes/alan-greenspan/the-use-of-a-growing-array-of-derivatives-and-the-related-application/)

[Alan Greenspan](https://sms4smile.com/quotes/author/alan-greenspan/)

> [“Innovations are financial risks.”](https://sms4smile.com/quotes/basic-books/innovations-are-financial-risks/)

Basic Books

> [“Without trust there’s no way that any organization can sustain innovation. Because without trust no one is willing to take the risks that innovation…](https://sms4smile.com/quotes/dennis-stauffer/without-trust-there-s-no-way-that-any-organization-can-sustain/)

Dennis Stauffer

> [I realized - I've been an opposition journalist in Russia for a long time. And I've often considered how real risks are and how…](https://sms4smile.com/quotes/masha-gessen/i-realized-i-ve-been-an-opposition-journalist-in-russia-for-a-long/)

[Masha Gessen](https://sms4smile.com/quotes/author/masha-gessen/)

> [“The key is having the higher-level perspective to make fast and accurate judgments on what the real risks are without getting bogged down in…](https://sms4smile.com/quotes/ray-dalio/the-key-is-having-the-higher-level-perspective-to-make-fast-and/)

[Ray Dalio](https://sms4smile.com/quotes/author/ray-dalio/)

> [Movie promotions - as with all business, it is an important part of any release because of the inherent high financial risk, and sometimes…](https://sms4smile.com/quotes/ekta-kapoor/movie-promotions-as-with-all-business-it-is-an-important-part-of-any/)

[Ekta Kapoor](https://sms4smile.com/quotes/author/ekta-kapoor/)

> [Seeing the sacrifices my grandfather made for his business made me feel comfortable with the concept of financial risk at quite a young age.…](https://sms4smile.com/quotes/ben-francis/seeing-the-sacrifices-my-grandfather-made-for-his-business-made-me/)

[Ben Francis](https://sms4smile.com/quotes/author/ben-francis/)

> [Being a startup entrepreneur is not for everybody and it’s not the only desirable career choice. I also know that many people have families…](https://sms4smile.com/quotes/mark-suster/being-a-startup-entrepreneur-is-not-for-everybody-and-it-s-not-the/)

[Mark Suster](https://sms4smile.com/quotes/author/mark-suster/)

> [The global financial crisis - missed by most analysts - shows that most forecasters are poor at pricing in economic/financial risks, let alone geopolitical…](https://sms4smile.com/quotes/nouriel-roubini/the-global-financial-crisis-missed-by-most-analysts-shows-that-most/)

[Nouriel Roubini](https://sms4smile.com/quotes/author/nouriel-roubini/)

> [There is a simple way of avoiding excess risk-taking by the managers of our financial institutions. It is to make it a crime ...…](https://sms4smile.com/quotes/paul-collier/there-is-a-simple-way-of-avoiding-excess-risk-taking-by-the-managers/)

[Paul Collier](https://sms4smile.com/quotes/author/paul-collier/)

> [Suning Appliance has no problem of financial risk. Do you think I'm risky? I'm definitely not risky.](https://sms4smile.com/quotes/zhang-jindong/suning-appliance-has-no-problem-of-financial-risk-do-you-think-i-m/)

[Zhang Jindong](https://sms4smile.com/quotes/author/zhang-jindong/)

> [ “This ... he largest financial bailout in history ... was not just a bailout of SVB \[Silicon Valley Bank\]. It was a bailout of… ](https://sms4smile.com/quotes/james-rickards/this-he-largest-financial-bailout-in-history-was-not-just-a-bailout/)

[James Rickards](https://sms4smile.com/quotes/author/james-rickards/)

> [Financial risk is always associated with drug discovery. But the benefit that a blockbuster drug can bring to the business can be phenomenal if…](https://sms4smile.com/quotes/pankaj-patel/financial-risk-is-always-associated-with-drug-discovery-but-the/)

[Pankaj Patel](https://sms4smile.com/quotes/author/pankaj-patel/)

> [“One stretch of the gene is repeated a variable number of times, and the version with seven repeats (the “7R” form) produces a receptor…](https://sms4smile.com/quotes/robert-m-sapolsky/one-stretch-of-the-gene-is-repeated-a-variable-number-of-times-and/)

[Robert M. Sapolsky](https://sms4smile.com/quotes/author/robert-m-sapolsky/)

> [If you're not staying on top of your money, you are putting your financial well-being at risk.](https://sms4smile.com/quotes/suze-orman/if-you-re-not-staying-on-top-of-your-money-you-are-putting-your/)

[Suze Orman](https://sms4smile.com/quotes/author/suze-orman/)

## More by Kenneth Arrow

> [The health care provisions are presumably for individuals. And whoever pays for them, whether it's paid by the individual, state, whatever, the value is…](https://sms4smile.com/quotes/kenneth-arrow/the-health-care-provisions-are-presumably-for-individuals-and-whoever/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [From the time I first understood economic principles, I was always concerned also that any system be operated on an efficient basis, which meant…](https://sms4smile.com/quotes/kenneth-arrow/from-the-time-i-first-understood-economic-principles-i-was-always/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [Knowledge is a free good. The biggest cost in its transmission is not in the production or distribution of knowledge, but in its assimilation.…](https://sms4smile.com/quotes/kenneth-arrow/knowledge-is-a-free-good-the-biggest-cost-in-its-transmission-is-not/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [Family is a difficult matter. I must admit I do not know that the state can intervene successfully in a family. It's a fact…](https://sms4smile.com/quotes/kenneth-arrow/family-is-a-difficult-matter-i-must-admit-i-do-not-know-that-the/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [The MD is well aware that the forecasts are no good but he needs them for planning purposes ...](https://sms4smile.com/quotes/kenneth-arrow/the-md-is-well-aware-that-the-forecasts-are-no-good-but-he-needs-them/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [One way of looking at Impossibility Theorem is that we proposed some criteria for what a good system should be: what is it you…](https://sms4smile.com/quotes/kenneth-arrow/one-way-of-looking-at-impossibility-theorem-is-that-we-proposed-some/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [Vast ills have followed a belief in certainty.](https://sms4smile.com/quotes/kenneth-arrow/vast-ills-have-followed-a-belief-in-certainty/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [In The United States, the only real change I know has been Instant Runoff, which is usually applied to municipal elections. I see no…](https://sms4smile.com/quotes/kenneth-arrow/in-the-united-states-the-only-real-change-i-know-has-been-instant/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [I do sense, as compared with let's say the early '50s, there's somewhat more of a careerism. I don't think it's anything special to…](https://sms4smile.com/quotes/kenneth-arrow/i-do-sense-as-compared-with-let-s-say-the-early-50s-there-s-somewhat/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [The switch to the market in Eastern Europe, of course, has not exactly been one of the greatest advertisements for the market. There's no…](https://sms4smile.com/quotes/kenneth-arrow/the-switch-to-the-market-in-eastern-europe-of-course-has-not-exactly/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [I think the development of the venture capital system has been an example of something which is a successful improvement in risk-bearing. It doesn't…](https://sms4smile.com/quotes/kenneth-arrow/i-think-the-development-of-the-venture-capital-system-has-been-an/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [I think the idea that a society has to be responsible for all of its citizens, those who do well and those who do…](https://sms4smile.com/quotes/kenneth-arrow/i-think-the-idea-that-a-society-has-to-be-responsible-for-all-of-its/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [Now virtue may not always be its own reward, but in any case it is not usually bought and paid for at market rates.](https://sms4smile.com/quotes/kenneth-arrow/now-virtue-may-not-always-be-its-own-reward-but-in-any-case-it-is-not/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [The general uncertainty about the prospects of medical treatment is socially handled by rigid entry requirements. These are designed to reduce the uncertainty in…](https://sms4smile.com/quotes/kenneth-arrow/the-general-uncertainty-about-the-prospects-of-medical-treatment-is/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

> [I don't believe that unemployment is all voluntary, by anticipation of future wage movements or this sort of thing. I know you can modify…](https://sms4smile.com/quotes/kenneth-arrow/i-don-t-believe-that-unemployment-is-all-voluntary-by-anticipation-of/)

[Kenneth Arrow](https://sms4smile.com/quotes/author/kenneth-arrow/)

[Explore all 44 Kenneth Arrow quotes ](https://sms4smile.com/quotes/author/kenneth-arrow/)

## More Able quotes

> [I am certain that children always know more than they are able to tell, and that makes the big difference between them and adults,…](https://sms4smile.com/quotes/jacques-lusseyran/i-am-certain-that-children-always-know-more-than-they-are-able-to/)

[Jacques Lusseyran](https://sms4smile.com/quotes/author/jacques-lusseyran/)

> [I have observed this in my experience of slavery, - that whenever my condition was improved, instead of its increasing my contentment, it only…](https://sms4smile.com/quotes/frederick-douglass/i-have-observed-this-in-my-experience-of-slavery-that-whenever-my/)

[Frederick Douglass](https://sms4smile.com/quotes/author/frederick-douglass/)

> [There is something about the South that accepts the supernatural. If you don't accept it and you're having a conversation with someone who does,…](https://sms4smile.com/quotes/alice-englert/there-is-something-about-the-south-that-accepts-the-supernatural-if/)

[Alice Englert](https://sms4smile.com/quotes/author/alice-englert/)

> [In the '80s, the way radio was programmed, if you didn't have a hit record you weren't going to be able to make any…](https://sms4smile.com/quotes/huey-lewis/in-the-80s-the-way-radio-was-programmed-if-you-didn-t-have-a-hit/)

[Huey Lewis](https://sms4smile.com/quotes/author/huey-lewis/)

> [I think I've had the longest career of strength, focus, and still being able to sell records. I think I'm that guy. I'm still…](https://sms4smile.com/quotes/nas/i-think-i-ve-had-the-longest-career-of-strength-focus-and-still-being/)

[Nas](https://sms4smile.com/quotes/author/nas/)

> [I have that need in me, I want everyone to love me, but I'm embarrassed by that need, so I wanted to cover it…](https://sms4smile.com/quotes/anthony-jeselnik/i-have-that-need-in-me-i-want-everyone-to-love-me-but-i-m-embarrassed/)

[Anthony Jeselnik](https://sms4smile.com/quotes/author/anthony-jeselnik/)

> [Thinking about the things that happened, I don't know any other ball player would could have done what he (Jackie Robinson) did. To be…](https://sms4smile.com/quotes/pee-wee-reese/thinking-about-the-things-that-happened-i-don-t-know-any-other-ball/)

[Pee Wee Reese](https://sms4smile.com/quotes/author/pee-wee-reese/)

> [I wanted to remember in order to be able to return.](https://sms4smile.com/quotes/anais-nin/i-wanted-to-remember-in-order-to-be-able-to-return/)

[Anais Nin](https://sms4smile.com/quotes/author/anais-nin/)

> [Government schools, with your tax money, now discourage the teaching of multiplication tables by rote memorization but teach reading by the 'look-and-say' method which…](https://sms4smile.com/quotes/greg-perry/government-schools-with-your-tax-money-now-discourage-the-teaching-of/)

Greg Perry

> [I don't know if I would qualify as mainstream. I think I have managed to function pretty successfully on the fringes of the music…](https://sms4smile.com/quotes/pat-metheny/i-don-t-know-if-i-would-qualify-as-mainstream-i-think-i-have-managed/)

[Pat Metheny](https://sms4smile.com/quotes/author/pat-metheny/)

> [What we're supposed to do as actors is be able to portray real human beings and emotions. And if you grow up in this…](https://sms4smile.com/quotes/emily-browning/what-we-re-supposed-to-do-as-actors-is-be-able-to-portray-real-human/)

[Emily Browning](https://sms4smile.com/quotes/author/emily-browning/)

> [The reason that Apple is able to create products like iPad is because we always try to be at the intersection of technology and…](https://sms4smile.com/quotes/steve-jobs/the-reason-that-apple-is-able-to-create-products-like-ipad-is-because/)

[Steve Jobs](https://sms4smile.com/quotes/author/steve-jobs/)

> [It was an important period for us, because even though we weren't a "punk band", and what became a model for a punk band,…](https://sms4smile.com/quotes/stephen-mallinder/it-was-an-important-period-for-us-because-even-though-we-weren-t-a/)

[Stephen Mallinder](https://sms4smile.com/quotes/author/stephen-mallinder/)

> [- You look fine. - Right. I look fine. Except I don't, said Zora, tugging sadly at her man's nightshirt. This was why Kiki…](https://sms4smile.com/quotes/zadie-smith/you-look-fine-right-i-look-fine-except-i-don-t-said-zora-tugging/)

[Zadie Smith](https://sms4smile.com/quotes/author/zadie-smith/)

> [There is a way to be a woman, ask for what we deserve and be able to negotiate.](https://sms4smile.com/quotes/tracee-ellis-ross/there-is-a-way-to-be-a-woman-ask-for-what-we-deserve-and-be-able-to/)

[Tracee Ellis Ross](https://sms4smile.com/quotes/author/tracee-ellis-ross/)

Browse all 17,257 Able quotes

```json
{
    "@context": "https://schema.org",
    "@graph": [
        {
            "@type": "Quotation",
            "text": "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.",
            "creator": {
                "@type": "Person",
                "name": "Kenneth Arrow"
            },
            "isPartOf": {
                "@id": "https://sms4smile.com/quotes/#website"
            },
            "url": "https://sms4smile.com/quotes/kenneth-arrow/the-trouble-is-that-the-risks-that-are-being-hedged-very-well-by-new/",
            "about": {
                "@type": "Thing",
                "name": "Able"
            },
            "@id": "https://sms4smile.com/quotes/kenneth-arrow/the-trouble-is-that-the-risks-that-are-being-hedged-very-well-by-new/#quotation",
            "image": {
                "@type": "ImageObject",
                "@id": "https://sms4smile.com/quotes/i/4d4/kenneth-arrow-14948_able_the-trouble-is-that-the-risks-that-are-b_547180.jpg",
                "contentUrl": "https://sms4smile.com/quotes/i/4d4/kenneth-arrow-14948_able_the-trouble-is-that-the-risks-that-are-b_547180.jpg",
                "url": "https://sms4smile.com/quotes/i/4d4/kenneth-arrow-14948_able_the-trouble-is-that-the-risks-that-are-b_547180.jpg",
                "width": 1080,
                "height": 1080,
                "caption": "“The trouble is that the risks that are being hedged very well by new financial securities are financial…” — Kenneth Arrow",
                "creditText": "SMS4Smile Quotes",
                "creator": {
                    "@id": "https://sms4smile.com/quotes/#organization"
                }
            }
        },
        {
            "@type": "BreadcrumbList",
            "itemListElement": [
                {
                    "@type": "ListItem",
                    "position": 1,
                    "name": "Home",
                    "item": "https://sms4smile.com/"
                },
                {
                    "@type": "ListItem",
                    "position": 2,
                    "name": "Quotes",
                    "item": "https://sms4smile.com/quotes/"
                },
                {
                    "@type": "ListItem",
                    "position": 3,
                    "name": "Kenneth Arrow",
                    "item": "https://sms4smile.com/quotes/author/kenneth-arrow/"
                },
                {
                    "@type": "ListItem",
                    "position": 4,
                    "name": "The trouble is that the risks...",
                    "item": "https://sms4smile.com/quotes/kenneth-arrow/the-trouble-is-that-the-risks-that-are-being-hedged-very-well-by-new/"
                }
            ],
            "@id": "https://sms4smile.com/quotes/kenneth-arrow/the-trouble-is-that-the-risks-that-are-being-hedged-very-well-by-new/#breadcrumb"
        },
        {
            "@type": "WebSite",
            "@id": "https://sms4smile.com/quotes/#website",
            "name": "SMS4Smile Quotes",
            "url": "https://sms4smile.com/quotes/",
            "publisher": {
                "@id": "https://sms4smile.com/quotes/#organization"
            }
        },
        {
            "@type": "Organization",
            "@id": "https://sms4smile.com/quotes/#organization",
            "name": "SMS4Smile Quotes",
            "url": "https://sms4smile.com/quotes/",
            "logo": {
                "@type": "ImageObject",
                "url": "https://sms4smile.com/quotes/wp-content/themes/sq/assets/icons/icon-512.png",
                "width": 512,
                "height": 512
            }
        }
    ]
}
```