Henry Thornton writes:

“The wild cards for 2006 are not
unlike those that threatened prosperity in 2005. Bird flu, major terrorist
attacks, the resurgence of global inflation, big drops in commodity prices, a
crisis in the Chinese economy are all examples of low probability events that
could derail the generally positive outlook. The rumours that the
US may be poised to attack
Iran are particularly disturbing.”
This is the view of Henry’s Editor, PD Jonson.

This weekend some of these threats
seemed especially prominent.

Iran: “Nuclear Iran global
threat, says Bush.” George W Bush has had productive talks with the new German
Chancellor, Angela Merkel, Laurent Lozano reports from Washington for The Oz. “Ms Merkel said she was “greatly
encouraged” by the talks with Mr Bush and indicated that her country would take
a hard line with Iran.”

Bird flu: There are signs that the
virus is mutating, and the big fear is that this could lead to human-to-human

Commodity prices: “… with the
prices of copper, gold and aluminium scaling new heights this week, close
observers of the market are starting to worry. Some believe we are now
witnessing the birth of an investment bubble.” (The

Global Warming: David Bassanese in
the Weekend Fin says that “global warming could wreak havoc with Australia’s
coasts, not to mention agriculture. Meanwhile, our energy-importing customers
will aggressively seek ways to cut reliance on fossil

There is a simple risk management
technique. Estimate the potential cost of each risk, attach a realistic
probability to each event, add up all the probability adjusted costs to
calculate the expected cost.

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