Numbers Are Not Enough to Calculate Banking Risk

If numbers had told us all we need to know then we wouldn’t have come up with words. And now we have the number-guys telling us that numbers are not enough for the most counted and counted upon area of finance.‪#‎Finance‬ ‪#‎AssetManagement‬

The basic issue:

  1. Future projections are based on historical data which implies an assumption that the future will follow the patterns of the past. This goes farther away from truth as history seldom repeats itself in the technology driven corporate world.
  2. Even if the the above assumption was granted, there is simply not enough data to extrapolate!

Read the whole analysis by Bloomberg here.


2 thoughts on “Numbers Are Not Enough to Calculate Banking Risk

  1. Interesting reading ! It is true that math/data in current state is unable to accurately depict future especially in these volatile times, however math does anchor overly ambitious and imaginative ideas towards more achievable reality.

    However, the article fails to shed any light on the alternative to math/data analysis.

    Liked by 1 person

    1. Valid point Imranullah! The only alternative is to limit portfolios which is ‘bad business’. Thus when the pragmatic corporate professional is faced with a choice between bad business and risky business the choice is obvious.


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