The fact that – most market participants rely on stability in the financial markets and – exclude possible risks from (even worldwide) turbulences in their expectations – with the danger of not being sufficiently prepared for such distortions when they occur. – The reason for this is often also the prevalence of uncritical model faith. A seemingly reassuring result from a risk model can sometimes be a distorted signal; for example, market risk models in times of unusually low volatilities or credit risk models in the environment of a real estate bubble. – See meltdown risk, financial mathematics, liquidity management, risk models, stress test.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/