Of Time and the Modeler

One of the criticisms leveled at the risk assessment models blamed for many of the recent failures in the finance world is that they allowed too much room for error–that the models themselves were inaccurate.  My argument is that it was not the models but operator error–sloppiness or excessive optimism–in dealing with probabilities.   Theoretical probability, […]

Lack of Risk Management Cited as Key Cause of Credit Crunch

In a recent policy paper, the Association of Chartered Certified Accountants (ACCA) named the “failure of institutions to appreciate and manage the inter-connection between the risks inherent in their business activities” as a key factor that led to the credit crisis. The paper goes on to list the lack of influence of risk management departments […]