Managing Model Risk: Part 1. “Models are Always Wrong”
“Models are always wrong,” said Joe Pimbley, Principal at Maxwell Consulting, via webinar on January 29, 2013. He was the first of a panel of three speakers invited by the Global Association of Risk Professionals to discuss model risk, what it is, and how to assess and validate it after the financial crisis. Models are always wrong, Pimbley clarified, because they are only simplifications. “Wrongness” he defined as some type of error or omission that materially impacts the results as understood by the user. A model can be wrong because the meaning of the result differs from that understood by […]
MATLAB for Excel Users: “Discoverability”
When looking for good data analysis tools, many financial professionals turn first to MS Excel which displays numeric data, contains advanced functions, and can be programmed with Visual Basic. A growing number of professionals are turning to MATLAB which has strengths complementary to ordinary spreadsheets. At a webinar on January 15, 2013, Adam Filion, application engineer at MathWorks, showed approximately three hundred audience members how easily features of MATLAB software adapt themselves to rapid analysis of large datasets. In Excel functions, the input is specified as a cell location and the math is hidden. In MATLAB, the interface has a […]
Analytical Tools to Gain Insight and Speed Up Numerical Analysis
“Symbolic computing can be a practical part of the solution to your problem,” said Deepak Ramaswamy, technical marketing manager at Mathworks. On January 8, 2013 he showed about three hundred participants via webinar how they could switch between analytical tools in a Notebook app to numerical analysis of the same problem in the MATLAB interface. He stepped his way through one “classic” and two “real-life” problems: the damped oscillator model; fuel consumption of a rocket-powered car; and kinematics of a double-jointed robot arm. The three problems can be written as systems of Ordinary Differential Equations (ODEs) and this was the […]