“The people who ran the financial firms chose to program their risk-management systems with overly optimistic assumptions and to feed them oversimplified data. This kept them from sounding the alarm early enough.”
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How Wall Street Lied to Its Computers (via cartographer) (via danw)
Ha. Let’s remember the interests represented by this quote from RiskMetrics (my former employer). So what you’re saying Gregg is that they built in the wrong assumptions (because they’ve disclosed them to you?), and what they should have done is outsource the risk management to you so that they not only don’t have control over the assumptions but they won’t even know what they are? Interesting take. Going to the risk management vendors for quotes on this topic will yield nothing but sales pitches.
