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201504 Model risk daring to open the black box
With the world becoming ever more
dependent upon complex computerised models to help guide and
automate human decision making, the risks involved in reliance upon
such systems is increasing.
In 2013 the BBC highlighted the
potential global economic implications of errors in such models
with the student who caught out the profs article;
reinforcing the old adage 'garbage in, garbage out'.
Similarly, CFO magazine have
provided a timely reminder of the Top 10 Tax and Accounting Mistakes that Cost
Companies Billions, focusing on the financial losses and
reputational damage that can result from such mistakes.
Approaches to mitigate such risks
have become an increasingly important part of how progressive
analysts craft their trade. As such, SL Investment Management
welcomes the Actuarial Profession's current attention on this
SL Investment Management Senior
Actuary, Louise Witts attended the Institute and Faculty of
Actuaries (IFoA) event "Model Risk - Daring to open the black box"
at London's historic Staple Inn, High Holborn, on 23rd
Over the last year Louise has been
a member of the Model Risk Working Party. The event was organised
to discuss the findings of the Working Party's paper, aimed at:
Louise commented, "At SL
Investment, we already take a risk averse approach to modelling,
with much of our complex financial analysis performed within the
industry standard Towers Watson 'MoSes' modelling environment.
However, as always, some useful ideas have come out of the Working
Party's research which we plan to incorporate into our modelling
processes going forward."
A more detailed summary of the
event can be found here.
Alternatively, please contact Louise direct for further
information on the event, or to discuss life settlement investments