Over-reliance on risk models a danger, says Lawrence

An over-reliance on models can lead to errors when calculating the levels of risk within an organisation, and the implications of model risk are still not fully understood, Lawrence said.

“The output of models is often wrong, and is always to be distrusted,” said Lawrence. “Models should rather serve as a beginning for conversation.”

Despite the increased sophistication of risk modelling and measurement systems on the market, the role of judgement is still primary, he said. “If you put garbage into a system, you get garbage out, so the role of judgement will always be important.”

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