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A technique for managing complicated risk which is the source of a lot of trouble, especially when used, as it habitually is, to manage complex risks.
The owners of Long-Term Capital Management, and for that matter, their counterparties and much of the financial system discovered this to their surprise and cost during the Russian crisis of 1998, and again in the Lehman collapse and its aftermath in 2008. It is a lesson that folks are yet to learn.
God does not play dice. But if she did, whom would she play against?
See also
