Risk, for purposes described here, is the distribution of returns relative to a benchmark.  For example, if you were to randomly choose a component of the S&P 500, there is a 50% chance you would outperform the S&P 500 Equal Weighted index.  There is also a 50% chance you would underperform the index. If you ignore the magnitude of component returns and simply rank components (e.g. from 1 to 500), this distribution would be uniform (flat).  This uniform distribution would be “market risk,” i.e. the risk you assume by buying components of the index and thus yield the 50% chance of under or over-performing the index. But if we could reshape this distribution so it was no longer uniform (flat), then we could have a greater than 50% probability of outperforming the index.  The probability is simply the area under the density curve of the distribution. Those density curves with larger areas on the right side indicate a higher probability of outperforming the market. This altering of the density curve of returns is what we mean by “reshaping risk”.