True lies and risk management
Quantitative risk management is actually one of the topics that I can speak about with some authority because I have worked in the area professionally. Seeing the smoke and mirrors that goes on behind the scenes, I managed to convince myself that one of the greatest dangers to the markets is, ironically, risk management. I’ve referred to this as the “Risks of Risk Management“.
But since I am such a small potato, who would listen to me? Anyway, I got a real kick out of reading this latest article by Satyajit Das.
I stumbled on Das’ article by following a few links deeper from the reference pointed out by another of my favorite blogs: Financial Armageddon.
One of the “funny” things is that most hedge funds and investment banks are now FINALLY caught up in sophistication to where LTCM was in 1998.