The Zen of Modeling
From Open Risk Manual
The Zen of Modelling
Risk modeling is as much art as it is science
The Zen of Modeling aims to capture the struggle for risk modelling beauty
- An undocumented risk model is only a computer program
- A risk model that cannot be programmed is only a concept
- A risk model only comes to life with empirical validation
- Correct implementation of an imperfect model is better than wrong implementation of a perfect model
- In complex systems there is always more than one path to a risk model
- There are no persistently true models but there are many persistently wrong models
- Correlation is imperfectly correlated with causation
- Nirvana is the simplest model that is fit for purpose
- Hierarchical systems lead to hierarchical models. Uncertainty is highest at the top
- Model assumptions are more vulnerable than model structure
- Building risk models is easy, managing model risk is not
- Models inherit their nature from their creators, but nurture from their use environment
- Models don't speak people's languages. It is the responsibility of the modeler to translate to an understandable idiom
- People don't care about models, only about model outcomes. It is the responsibility of the modeler to be responsible
- Models closed in black boxes perish. Models live a healthy life when open and free
