Maths graduates blamed for poor loan risk management

Tim Wallace
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MATHS graduates confused bank bosses with extremely technical and detailed risk analysis, leading to a misunderstanding of banks’ positions and contributing to the financial crisis, the Parliamentary Commission on Banking Standards heard yesterday.

“There was a feeling that we understood risk, but it was an illusion created by an influx of people with different skill sets – maths and physics graduates who fell on the data like a pack of dogs on a dead cow,” said Andrew Hilton from the Centre for the Study of Financial Innovation.

But the models they made were too simple and did not manage risk well, partly leading to the crisis, he said.