The power of any model – at least in finance – is directly proportional to its simplicity.
Obscurity is the first sign of something being amiss, and a lack of clarity at least
invites scepticism. Remember that more sophisticated models are not necessarily
better than simpler ones. A simple model may be perfectly adequate for a specific
job. Someone driving from, say, Paris to Monte Carlo will not be delayed much if he
ignores the earth’s curvature. The conclusion might be different for a plane or a
satellite. It is the same in the risk management industry. There is a fundamental
difference between being approximately right and precisely wrong.
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