Risk Management Interactive

Liability Management

Balance the book to minimize outcome variance. Move lines, adjust limits, and hedge to control maximum loss scenarios.

Book Parameters

10000 500000

30 70

500 25000

📊 Book Balance

Home Exposure $55.0K

Away Exposure $45.0K

Imbalance $10.0K (10%)

Exposure Distribution

Home: 55% Away: 45%

Outcome Scenarios

If Home Wins

Pay out: -$105.0K

Keep: +$45.0K

If Away Wins

Pay out: -$85.9K

Keep: +$55.0K

Worst Case (Home Wins) $-5.0K

🎯 Management Strategies

Line Movement

Move line to attract bets on other side

When: Imbalance > 10%

Limit Reduction

Lower max bet on overloaded side

When: Sharp action detected

Hedge

Bet at another book to offset exposure

When: Large single bet

Lay Off

Syndicate with other books

When: Extreme imbalance

R Code Equivalent

# Liability management
calculate_exposure <- function(handle, home_pct, vig = 0.0476) { 
  home_exp <- handle * home_pct / 100
  away_exp <- handle * (100 - home_pct) / 100
  imbalance <- abs(home_exp - away_exp)
  
  list(
    home = home_exp, away = away_exp,
    imbalance = imbalance,
    imbalance_pct = imbalance / handle * 100,
    expected_profit = handle * vig
  )
}

# Line movement to balance
suggest_line_move <- function(exposure, target_balance = 0.5) { 
  current_pct <- exposure$home / (exposure$home + exposure$away)
  needed_shift <- target_balance - current_pct
  # Roughly 0.5pt move = 2-3% shift
  pts_to_move <- needed_shift / 0.025
  return(pts_to_move)
}

exp <- calculate_exposure(100000, 55)
cat(sprintf("Imbalance: %.1f%%\n", exp$imbalance_pct))

✅ Key Takeaways

• Balanced book = guaranteed profit (the vig)
• Imbalanced book = variance exposure
• Move lines to attract opposite side

• Large single bets create concentration risk
• Hedge or lay off extreme exposures
• Real-time monitoring is essential