Risk Premium

Also known as: ICM risk premium, RP

The extra equity above 50% you need to profitably call an all-in under ICM, because losing chips costs more $EV than winning them returns.

In a chip-EV game, a coinflip all-in for equal stacks needs exactly 50% to break even. Under ICM the chips you can lose are worth more than the chips you can win, so you need more than 50% — the excess is the risk premium.

Formally it is the gap between the chip-EV breakeven and the Dollar EV ($EV) breakeven for a given all-in. A risk premium of 8% means a flip you'd take for free in chips now requires 58% equity to be $EV-neutral. It scales with pay jump steepness, how covered you are, and proximity to the bubble; it can exceed 20% on a satellite or money bubble and approaches zero when you are the chip leader covering everyone.

Risk premium is the actionable companion to bubble factor: bubble factor tells you how lopsided the spot is, risk premium tells you exactly how much equity you must add to your calling threshold.

Example

Bubble, you have 25bb and cover the big blind's 22bb shove. Chip-EV says call with 50% equity. With a steep next pay jump, ICM gives a risk premium of ~10%, so you actually need ~60% equity — a hand like AJo (a chip-EV call) becomes a fold because it flips at best against his shoving range.