Predicting the unpredictable: Value-at-risk, performativity, and the politics of financial uncertainty

Starting from an observation about the high-profile predictive failures of Value-at-Risk (VaR), an internationally instituted financial risk model, this article has attempted to make sense of its continued use by analyzing its productive, rather than predictive, power. This line of inquiry leads me to identify VaR's (counter)performative effects and the way in which it produces banks as authoritative, responsible managers of an uncertain financial future. Viewing financial markets through the lens of Keynesian uncertainty and model performativity helps explain VaR's failures by revealing VaR to be an inherently limited and potentially destabilizing practice. Its use participates in the construction of a financial system that is only temporarily stable and controllable. At the same time, VaR is an important source of authority for banks vis-�-vis regulators and the public because it represents the future as statistically calculable and expert prediction as the optimal, objective mode of preparing for that future. This, in turn, makes less thinkable other responses to uncertainty - ones that might be better suited to contend with the possibility of devastating losses unforeseeable - and perhaps produced - by the widespread use of VaR.