By David Rowe on 7/12/2011 9:06 AM

The US Securities and Exchange Commission is soliciting views on how to reform the credit rating process to minimise conflicts of interest and assure higher-quality ratings. But this exercise is based on an erroneous view of the possible.

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By David Rowe on 6/8/2011 2:43 PM

Many financial institutions are putting greater focus on stress testing, but most will require a cultural adjustment for it to become an effective part of the risk management process.

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By David Rowe on 4/8/2011 1:46 PM

Computers may triumph playing Jeopardy, but that represents mastery of only one dimension of what
we call human intelligence.

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By David Rowe on 2/17/2011 3:57 PM

Computers may triumph playing Jeopardy, but that represents mastery of only one dimension of what we call human intelligence.

An IBM computer named Watson recently captured the imagination of America by defeating the two most successful players in the game show Jeopardy. This is a more impressive accomplishment than when Big Blue, another IBM computer, defeated Gary Kasparov in a chess match. Jeopardy is played with an open ended set of categories and often involves obscure word games. To be even credible as a contestant the computer had to process spoken language, recognizing syntax and subtle nuances of meaning. For a computer, just understanding the questions is a mammoth challenge. What IBM has accomplished in building such a machine is a remarkable advance in natural language processing.

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By David Rowe on 2/8/2011 2:56 PM

On February 1, www.RiskCenter.com published a story on the draft proposal for treatment of asset impairment under combined IFRS and GAAP accounting rules.The essence of the story is captured in the following paragraph:

“At present, International Financial Reporting Standards (IFRSs) and US generally accepted accounted principles (GAAP) currently account for credit losses using an incurred loss model, which requires evidence of a loss (known as a trigger event) before financial assets can be written down. The boards have proposed moving to an expected loss model that provides a more forward-looking approach to how credit losses are accounted for, which they believe better reflects the economics of lending decisions.”

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