data

Optimum Price a Moving Target

How was risk-taking originally priced, and has this changed over time? Centuries ago, mercantile economies used to pool risk for the trading ships that were sent out. Over time, this “big chunk risk” has given way to increasingly more precise ways of determining risk, and is now down to individual financial transactions. “Pricing is the centre of gravity of this operation,” said Robin Bloor, Chief Analyst at The Bloor Group. “For every product theoretically there is an optimum price.” Beginning with this historical comparison, he was the first of three speakers at a webinar on August 24, 2016, sponsored by […]

Data Science 2. The Roadmap

“The core concept for data science is hypothesis testing,” said Nima Safaian, team lead for Trading Analytics at Cenovus Energy. The data scientist must identify trends, generate hypotheses, and test, test test. The scientist’s bent toward hypothesis testing should be even stronger than their math skills. Safaian was speaking at the Data Science webinar on August 2, 2016, sponsored by the Global Association of Risk Professionals (GARP). “Attitude is everything,” Safaian said. “Think like a startup. Have an agile mindset,” he urged, referring to the books The Lean Startup by Eric Ries and The Lean Enterprise by Humble, Molesky, and […]

Data Science 1. Trading Analytics

At the end of the day, what do you produce? If you are a knowledge worker, your “product” could be something as intangible and significant as decisions. That is the thinking behind the “decision factories” discussed in Roger Martin’s seminal Harvard Business Review article. If we labour in decision factories, then we are decision engineers, and our chief raw material is data, according to Nima Safaian, team lead for Trading Analytics at Cenovus Energy. “We need the capacity to produce many good decisions,” he said at the webinar on August 2, 2016, sponsored by the Global Association of Risk Professionals […]

Mega-Platforms, Mega Risk

There’s a world of difference between innovation and disruption. “Think of innovation as doing more, in the same old way,” said Haydn Shaughnessy, innovation specialist and author of Platform Disruption Wave: How the Platform Economy is Changing the World. He presented a GARP webinar on “The Rise of Mega-Platforms and the Risks to Banking” on May 25, 2016. In the first part of his talk, he described mega-platforms. He referred to the thesis of The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton Christensen. This book argues that successful companies get so caught up in meeting […]

The Case for Symbolic Computing

Should you care about symbolic computing? If your work involves concepts that are expressed in math, and if you want to reduce errors and routine work, then Samir Khan says, yes, you should. Khan, Product Manager at Maplesoft, was the first speaker in a webinar on May 25, 2016, titled “How Far Can Your Math Knowledge Go?” “Symbolic computing allows you to automatically derive system equations using well-defined rules,” said Khan. “It allows you to mechanize your work with equations, such as the routine manipulations that are done in algebra.” The traditional design process means the designer (or engineer or […]

War, Kidnapping, Data Theft

War, kidnapping, and data theft:  Is it some fiction pot-boiler that’s come over the transom? No, it’s the chapter on how the gross domestic product (GDP) came into being in Germany. Today’s excerpt comes from pages 117-8 of the book The Power of a Single Number: A Political History of GDP by Philipp Lepenies, translated by Jeremy Gaines (Columbia University Press, 2016). “[John Kenneth] Galbraith was surprised by the results of his calculations and surveys because they, for the first time, provided a clear picture of the Nazi economy. Because no set of tools comparable to gross national product calculation existed on […]

Platform of the Future

What will be the ideal modelling platform of future bankers? It will need to contain key functionalities in model execution, scenario management, and a “risk engine” that will deliver answers for multiple horizons at the loan level. Furthermore, it should implement the most advanced modelling suites, reduce the quants’ time to develop models, and contain simulation capabilities for stress testing and beyond. This bold vision of the future was presented by Martim Rocha, Advisory Business Solution Manager at SAS. He was the second of two presenters at the February 25, 2016, webinar offered by the Global Association of Risk Professionals […]

Integrated Data and Modelling

How can today’s bankers prepare for tomorrow’s challenges? Consider the financial models built using available data. Data collection and financial modelling used to be conducted in each different silos of the bank, with credit separate from market, which was separate from treasury and other groups). Then data became “managed” and modelling was moved to “platforms” which did not mix well between the various silos. A few brave souls began to integrate the data management for different groups of the bank. Other brave souls tried to integrate the modelling. This was the phase of integration achieved through batch calculations. Now, the […]

The Latest & Greatest

Although the next round of changes to accounting standards will not come into effect until 2018, alert financial analysts should already be asking companies about how they plan to address them, according to Canada’s top accountant. “Pay attention now, because companies do have the option to adopt” and some, such as Canadian banks, are adopting IFRS 9 early, said Linda Mezon, Chair of the Accounting Standards Board (AcSB). She was speaking at a webinar on January 21, 2016, to members of CFA Society Toronto and CPA Canada on the recent developments in accounting standards and emerging trends impacting financial statements. […]

Watch Out for Hippos

Is your company managing risk well enough to make the most of opportunities as they appear? Or does it suffer from risk paralysis? As a company matures, it moves from trying to identify all possible risks (and mitigating them), to saying “what risks will give me the chance to pursue an opportunity,” said Martin Pergler, Founder and Principal of Balanced Risk Strategies, Ltd. He was the first of two panellists at the webinar titled Explore Your Opportunity Landscape by Harnessing Your Risks, sponsored by the Global Association of Risk Professionals on November 18, 2015. Pergler began by making a memorable […]