Risk.net: OpRisk North America highlights the limitations of risk management

Good summary of recent OpRisk North America on Risk.net. Sample quote:

Mark Levonian, senior deputy comptroller for economics at the Office of the Comptroller of the Currency (OCC) in Washington, DC, opened the conference with his keynote speech on the morning of March 21 (the previous day had been devoted to technical seminars). He cautioned operational risk managers against relying too much on risk models.

“Op risk models should be a key part of the risk management process, but we have to ask ourselves whether the models are wrong. The use of models is crucial to good risk management today, but sometimes even the best models don’t work the way they are supposed to. In fact, all models don’t work sometimes. The risk that the models won’t work – model risk – is an operational risk in itself, and is a risk that has to be actively managed,” said Levonian.

Advertisements

Posted by Carlos Alvarenga

Carlos Alvarenga is the Executive Director of World 50 ThinkLabs and an Adjunct Professor at the University of Maryland's Smith School of Business.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s