Riskology: Complexity economics as a future source of alpha

Advances in understanding of networks hold potential for new trading strategies for hedge funds

Damian Handzy, chief executive of risk management service provider Investor Analytics

Massachusetts Institute of Technology behavioural economist Andrew Lo is fond of accusing economists of what he calls ‘physics envy,' and offers this eye-opening critique of his own field: "In physics, there are three laws that describe 99% of observed phenomena. In economics, we have 99 laws that describe 3% of what we see." Addressing that problem has been the goal of a small band of thought leaders around the world and their approach is to bring cross-disciplinary experts together to answer q