In tournament poker, winning isn’t just about having the biggest chip stack — it’s about maximizing your expected prize value (Prize EV). One of the key concepts for achieving this is the ICM Risk Premium, a hidden cost under the Independent Chip Model (ICM) that often goes unnoticed by many players.
This article explains what the risk premium is, why even strong hands might need to be folded in certain spots, and how this concept can significantly impact your late-stage tournament strategy. If you’ve ever wondered why folding marginally strong hands is sometimes the right play, this guide is for you.
What Is Risk Premium in ICM?
The risk premium refers to the additional EV loss incurred when risking elimination, especially in ICM-sensitive situations. Under the ICM, when one player busts, the remaining players see their prize EV increase. Therefore, your bust-out equals other players’ gain — making your survival more valuable than just your chip equity.
In practical terms, this means you’ll often need a stronger hand than usual to justify calling an all-in, especially when you’re not the one shoving.
Why You Should Fold More Hands in High-Risk Situations
When the risk premium is high, your strategy should become more conservative. Here are key situations that elevate the risk premium:
Top 3 Situations Where Risk Premium Is High
- Bubble or Final Table Threshold
- Busting means earning nothing or very little, so the pressure to survive is massive.
- Busting means earning nothing or very little, so the pressure to survive is massive.
- Presence of Short Stacks
- If other players are likely to bust soon, there’s no need to take unnecessary risks.
- If other players are likely to bust soon, there’s no need to take unnecessary risks.
- Significant Pay Jumps
- Going from 3rd to 2nd or 2nd to 1st often comes with large payouts. One mistake can cost thousands.
How to Adjust Your Strategy Based on Risk Premium
| Scenario | Standard Play | With ICM Risk Premium |
| AQo all-in | Push | Might fold |
| Call with 99 | Call | Fold unless QQ+ |
| Steal with A5s | Raise | Avoid stealing (impact is too high) |
Numerical Example: Risk Premium in Action
Let’s say it’s the final table with 5 players left:
- You: Middle stack (3rd place in chips)
- Opponent: Chip leader, covering your stack
- Your hand: JJ
- Opponent: Shoves from the Button
You might think you need ~50% equity to call profitably, but ICM calculation may show you need 65% or more due to the risk premium. That’s a big leap — and a clear example of why chip EV alone doesn’t tell the whole story.
Key Takeaways
Mastering the risk premium concept is essential for ICM-based tournament strategy. By understanding the hidden losses tied to potential bust-outs, you can make more +EV decisions, especially under pressure.
✅ Remember: Your elimination equals others’ profit
✅ Even strong hands may need to be folded
✅ Always be aware of your opponents’ ICM positions
Thinking in these terms helps you make razor-thin decisions at the final table with confidence.
Example Scenarios and Strategic Adjustments
| Tournament Situation | Strategic Example |
| Two short stacks remain | Even AQ may be a fold |
| You’re the chip leader | Apply ICM pressure to shorter stacks |
| Unsure whether to defend your BB | Fold wider than usual to avoid marginal bustouts |