Sunday, November 9, 2008

In Modeling Risk, the Human Factor Was Left Out

Steve Lohr
New York Times
November 4, 2008

Today’s economic turmoil, it seems, is an implicit indictment of the arcane field of financial engineering — a blend of mathematics, statistics and computing. Its practitioners devised not only the exotic, mortgage-backed securities that proved so troublesome, but also the mathematical models of risk that suggested these securities were safe.

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