by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
What exactly do models do? They tell us about part of a system (acknowledging – since you did read my previous blog – that they hide stuff). But what do models actually do? What actions do they perform?
Of course models do not act. Hopefully however they cause someone to act, since risk management is not a spectator sport.
Do you act based upon your models, or does your risk management department hope the models themselves take care of the issues and seize the opportunities by themselves? Which is it? Is risk modeling the be all and end all of risk management? Is there a disconnect between the people who build the models and the people who need to act based upon the models?
Wow – if only models could actually do more.
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