Risk Comes From Not Knowing What

Buffett made this remark in a 1993 address to Columbia University Business School graduates, where he was asked about his method for evaluating risk. His answer challenged the conventional academic definition: rather than measuring risk by stock price volatility or standard deviation, Buffett argued that true risk is simply the probability of permanent capital loss — and that stems from not understanding what you own. This view underpins his practice of investing only in businesses whose economics he can clearly analyse.