Editor’s Choice for April 16, 2009
When it comes to risk management, what matters more–the risk model itself or the decisions that result from findings of the risk modeling? A new article on the University of Pennsylvania’s [email protected] Web site, “Re-thinking Risk Management: Why the Mindset Matters More Than the Model,” discusses precisely that. Richard J. Herring, co-director of the Wharton Financial Institutions Center and professor of international banking, looks into the “limitations of models” in risk management–why didn’t they work for companies this time? Are the models “broken” or is the “the decisions that get made based on them,” that are faulty?