Quants, Risks and After-Work Drinks

Carpet at Marina Bay SandsI attended an after-work drinks event recently, attended mostly by quants. It was intriguing for me to enter this world for a while.

I am not a quant, though, given my background (science, finance, risk, business) there is some chance I might have gone that route, given the right influence, had I stumbled upon this world when I was choosing career paths a long, long time ago. Nevertheless, I’m not one now but it’s always interesting to discover new worlds.

There was no doubt, this was a bunch that were passionate about what they do, launching every now and again into discussions about various models, the gammas, thetas, vegas and the rest of the greeks. Contrary to popular belief, I didn’t find this group nerdy or geeky – they engaged in lively chatter with the very few non-quants, and had a genuine interest in travel, hobbies, education, volunteer work, and making the world a better place.

What I perhaps did find a little disturbing was that dealing with risks, to this group, seemed mostly about problems with the models, and improving the models. The risk management problems were about technical problems – market risk, credit risk etc, so the models needed to be improved. Hang on, but what about all the other contributing factors, I thought – compensation design, miscommunication, groupthink, thinking short-term (shortsightedly) to keep shareholders happy and the more commonsense stuff? These must be for other people to deal with, I gathered.

We all (quants or otherwise) love our comfort zones – after all we are all uniquely wired up, aren’t we? I enjoyed the evening – the company and the drinks – but couldn’t help coming away thinking risk management is still happening in silos despite all the talk about it needing to be all-encompassing recent years.

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