On Ruin and Risk

Just because I felt like it, and because I was in the middle of the Taleb paper, I thought I'd juxtapose these two quotes for contemplation:

This is from The Precautionary Principle (with Application to the Genetic Modification of Organisms) by Taleb, Read, Douady, Norman and Bar-Yam 2014

A way to formalize the ruin problem in terms of the destructive consequences of actions identifies harm as not about the amount of destruction, but rather a measure of the integrated level of destruction over the time it persists. When the impact of harm extends to all future times, i.e. forever, then the harm is infinite. When the harm is infinite, the product of any non-zero probability and the harm is also infinite, and it cannot be balanced against any potential gains, which are necessarily finite. This strategy for evaluation of harm as involving the duration of destruction can be used for localized harms for better assessment in risk management.

This is from Uncertain Lifetime, Life Insurance, and the Theory of the Consumer, Menahem Yaari, 1965.

Now a violation of the wealth constraint S(T) >= 0 is clearly a physical possibility, but some people think that the institutional framework makes it virtually impossible for a man in our society to die with a negative net worth. For this reason it is of interest to see what the consumer's optimal plan looks like given that the constraint S(T) >= 0 must hold with probability one.