Financialization treats risk as probabilisable, displacing close knowledge of the object valued

Evidence

A redefinition of the concept of risk thus resulted, as risks are conceived by financial theory as probabilisable. Consideration of risks in finance assumes it is possible to conduct analyses of a large number of events that can calibrate statistical forecasting models based on the law of large numbers. Statistical analysis of risk and the study of volatilities has become more important than close knowledge. The discount rate used to calculate NPV has also become justified by the risk the investor bears. Any investment must have a higher return than a bank deposit, because an investment is riskier. — Ève Chiapello, Financialisation of Valuation, 35

Categorization

• DEEPTHINKING: The claim that statistical analysis of risk has ‘become more important than close knowledge’ is the pivot of financialized valuation colonizing non-financial activity — the epistemic shift is dense enough to sit with.
• ADDENDUM: This directly supports ‘On Sacrifice’ if read loosely — no. Better: it extends the ‘Grafting & Growth’ article? No. Actually it best serves the reader’s stated theme of financialized valuation colonizing non-financial spheres: probabilizable risk replacing judgment.
• XREF: connects to: Systemic risk is emergent and irreducible to the sum of individual risks — Mark Blyth, Austerity: The History of a Dangerous…, 134; The bell-curve shape of Gaussian distributions is what banks’ risk models assume; Financialised valuations override prior forms of valuation and reshape how people act and identify — Ève Chiapello, Financialisation of Valuation, 16 (+18 more)

Related

• Finance is monetized quantification of future uncertainty exploiting shared existential precariousness (similarity 0.85)
• Financialization compresses present-future experience and radicalizes uncertainty (similarity 0.84)
• Financialised valuations override prior forms of valuation and reshape how people act and identify (similarity 0.84)
• Finance becomes the model for society’s responses to uncertainty. (similarity 0.83)
• Securitization names a mindset that abandons actual security for risk-juggling virtuosity (similarity 0.83)
• Securitization elevates speculation from support role to core profitability driver (similarity 0.83)
• Securitization converts uncertainty into quantifiable, tradeable risk and shapes daily life (similarity 0.83)
• Probabilistic valuation methods migrated from actuarial science into financial markets via Gaussian risk models (similarity 0.83)
• Financialised valuation draws on financial economics and mathematical finance. (similarity 0.82)
• Financialised reasoning can colonise non-monetary measures like scores and percentages. (similarity 0.82)
• Financialization replaced welfare-state collective security with individualized speculative insurance (similarity 0.82)
• Some financial metrics resist financialization by ignoring time and capital logic (similarity 0.82)
• Financialisation also colonizes non-economic spheres via valuation techniques. (similarity 0.82)
• Financialized valuation imposes short-termism and disconnects decisions from material production. (similarity 0.81)
• Financial valuation theory legitimizes financiers’ power by claiming they optimize resource allocation. (similarity 0.81)

Broader Connections

• Securitization converts uncertainty into quantifiable, tradeable risk and shapes daily life #expands (0.85) — Max Haiven, Cultures of Financialization, 248
• Value-at-risk quantifies portfolio exposure through estimated loss probabilities. #exemplifies (0.85) — Donald MacKenzie, An Engine, Not a Camera, 995
• Finance is monetized quantification of future uncertainty exploiting shared existential precariousness #expands (0.80) — Max Haiven, Cultures of Financialization, 554
• Speculation addresses incalculable uncertainty, not merely probabilistic risk. #qualifies (0.80) — Aris Komporozos-Athanasiou, Speculative Communities, 54
• Financialization shifts markets from calculation to speculation, destroying predictability #complicates (0.75) — Wendy Brown, Undoing the Demos, 742
• Money functions as an equivalent-certainty that reduces the need for information #complicates (0.72)
• Radicalized uncertainty pushes societies to adopt finance as a model for imagining the future #expands (0.72) — Aris Komporozos-Athanasiou, Speculative Communities, 18