Mathematical Ladder in Risk Management

To those whom finds the math too overwhelming, don't worry. It is a step by step process

Level 0: Basic Counting. It begins where you can count from 0 to 9, carry over to tens, from 99 carry over to 100, with this skill, you can theoretically count to any number.

Level 1: Basic operation(plus minus times divide). with this skill, we can give customer change, we know how many cans of drinks are there in 6 cartons X 12 cans/carton. We also can split bills among friends.

There will be no extra explanation for this part as it is assumed to be well understood.

Level 2-1: Percentage. With this skill, we can calculate commission, discounts, interests etc.

Level 2-2: Concept of Chance (Probability). with this understanding, we can adjust our expectation to the likelihood of certain events happening and also starts to understand more sophisticated concepts.

Level 2-3: Concept of Risking. With this knowledge, we understand what is capital, bet size, reward ratio, and drawdown.
https://understand-risk.ghost.io/basic-of-risking/
https://understand-risk.ghost.io/the-downfall-2-drawdown/

Level 3-1: Compounding. With this skill, we can calculate inflation, deflation, compounded interest etc.
https://understand-risk.ghost.io/basics-of-compounding/
https://understand-risk.ghost.io/the-power-of-compounding/
https://understand-risk.ghost.io/the-power-of-compounding-2/

Level 3-2: The Law of Large Numbers. With knowledge of normal distribution and confidence level, we understand chance in a deeper level.
https://understand-risk.ghost.io/the-law-of-large-numbers/

Level 4-1: Computing your values. As the previous concepts solidify, you could combine them to produce an average value to your investment decisions.
https://understand-risk.ghost.io/determind-the-value/

Level 4-2: Kelly Criterion. Combining chance(win probability), risk to reward ratio and risk ratio, you are starting to understand the full concept of risk management, and can confidently adjust your bet size to your risk appetite.
https://understand-risk.ghost.io/kelly-criterion/
https://understand-risk.ghost.io/kelly-criterion-2-2/
https://understand-risk.ghost.io/kelly-criterion-3/