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Qualitative risk management

Quantitative risk management is all very well, says this article, but it shouldn’t be used in isolation. Well, yes. The big risk is that the quantitative results don’t reflect reality: either the model is wrong, or it hasn’t been calibrated properly, or it’s using the wrong data. Even if you’ve got a good model, it can only give you results in terms of probabilities. Even a really unlikely event isn’t impossible. Once in a thousand years doesn’t mean that you’ve got to wait a thousand years for it to happen, or that it won’t happen twice in the same year.